On April 14, 2021, U.S. District Judge George C. Hanks Jr., issued an opinion denying defendants’ motion to dismiss the case. Specifically, the Judge found that McDermott International, Inc. must face a securities fraud suit over its acquisition of Chicago Bridge & Iron Co., denying its motion to dismiss and finding that stockholders sufficiently pled that proxy statements from McDermott were made “with actual knowledge that they were misleading.” The Opinion said McDermott cannot escape the allegations it concealed material problems with the integration of CB&I’s business and the likelihood that its Focus Projects would incur higher-than-expected costs.
The judge rejected the argument that statements made by the defendants are protected under the Private Securities Litigation Reform Act’s safe harbor provisions because he found Lead Plaintiff backed up its claims with internal McDermott and CB&I documents.
“Defendants did not disclose the existence of the estimates, which ultimately proved to be correct,” the judge said. “Defendants’ repeated assurances regarding the Focus Projects” – four of CB&I’s construction projects – “omitted material facts about the costs of the Focus Projects and those omissions are actionable.”
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