Several US law firms have launched class actions against George Economou’s DryShips on Friday alleging the company has violated federal securities laws.
Pomerantz LLP, Stull, Stull & Brody and Goldberg Law have all announced class actions against the company with Pomerantz also launching action against certain directors of DryShips. All three firms are calling on investors who acquired shares in DryShips between June 2016 and July 2017 to contact them to join the action.
The law firms all issued similar statements alleging that DryShips made materially false and misleading statements regarding the company’s business, operational and compliance policies. It is alleged DryShips was engaged in a systemic stock-manipulation scheme to artificially inflate the company’s share price and that share sale transactions with Kalani Investments were an illegal capital-raising scheme.
Action by the three firms follows an article in the Wall Street Journal last week outlining the history of discounted share issues to Kalani, who proceeded to resell them on the open market which may be a violation of federal securities law if Kalani is deemed to have acted as the underwriter of a de facto public offering.
To counter the share dilution caused by the the share issues, DryShips has issued a series of reverse stock splits which have failed to keep the share price from plunging more than 99.9% since November 2016.
Earlier this month, DryShips and Economou were named as defendants in a lawsuit filed in the High Court of the Marshall Islands which alleges breaches of fiduciary duty, unjust enrichment, and conflict of interest.
DryShips later announced the lawsuit failed in its attempt to seek an injunction to suspend the further issuance of shares. The plaintiff was also seeking compensatory and punitive damages.
Another Economou vehicle, Ocean Rig, is also facing scrutiny. An Ocean Rig shareholder has filed an objection to relief sought by Ocean Rig in the US in aid of Ocean Rig’s attempted $3.7bn financial restructuring ongoing in the Cayman Islands.