Two law firms in the US are investigating potential claims on behalf of Ocean Rig shareholders that concern possible breaches of financial regulations by the NASDAQ-listed company.
The New York-based firms Bronstein, Gewirtz & Grossman and Pomerantz are looking into possible violations of sections 10(b) and 20(a) of the US Securities Exchange Act of 1934 by Ocean Rig and/or its employees.
These sections of the Act respectively govern the limits on the size of positions in any security-based swap that may be held by any person, and the rules for buying and selling shares while in possession of non-public information.
Both law firms observe that Ocean Rig issued a fleet update after the market close on October 7 that stated: “The [drillship] Ocean Rig Mylos is in the process of completing its current well in Brazil. On September 25, 2015, [Ocean Rig] received notice of material breach under the contract which entitles our client to terminate the contract if such breach is not remedied within 75 days.”
“Following this news, shares of Ocean Rig fell $0.38 or 14.50% during intraday trading to trade at $2.24 on October 8, 2015,” Bronstein, Gewirtz & Grossman said in a statement today.
Before Wednesday’s announcement, Ocean Rig had not publically disclosed the notice of material breach from Repsol Sinopec Brasil, the charterer of the Ocean Rig Mylos.
The drillship has been on a three-year fixed-term charter to Repsol Sinopec in Brazil since November 2013. The vessel is scheduled for redelivery in late 2016, but the charterer has option to extend the contract period by two further years until Q2 2019.
Section 20(a) of the US Securities Exchange Act states that: “Any person who violates any provision of this title or the rules or regulations thereunder by purchasing or selling a security while in possession of material, non-public information shall be liable in an action in any court of competent jurisdiction to any person who, contemporaneously with the purchase or sale of securities that is the subject of such violation, has purchased or sold securities of the same class.”
At the time of writing, Ocean Rig’s stock is trading at $2.175 per share.