Legal Recourse May be Available to Investors Hurt by Cobalt International and Seadrill Limited Stock Declines

The recent and sharp decline of oil prices has been the source of joy for consumers at the gas pump.  Unfortunately, many investors have been experiencing the opposite emotions as the price of many oil and gas related stocks have plummeted.  Two of these companies are Cobalt International Energy, Inc. and Seadrill Limited. Cobalt is an international oil exploration company that has seen its stock price drop by well-over 50% since this time last year.  Similarly, Seadrill is a separate offshore drilling company that has similarly seen its share prices fall by 72% in the past six months. Seadrill shareholders also saw their dividends suspended.

Losses Rooted in Violations?

The losses suffered by investors in Cobalt and Seadrill were exacerbated by alleged violations of misconduct and SEC violations by both entities.  Among other misconduct, Cobalt has been accused of making false and misleading statements to investors, issuing equally false press releases, and filing misleading filings with the SEC.  A number of the allegation center around statements by Cobalt regarding its access to Angolan wells and related unethical business practices.

Seadrill is similarly accused of violating SEC laws by making false and misleading public statements including statements expressly stating that its financials could support its dividend through 2016. A statement that proved false just months after it was issued when the dividend was indefinitely suspended.

Lawsuits Filed

Class action lawsuits have been instituted against both companies to seek legal recourse for investors who were duped by their conduct.  However, it was not just the companies themselves that played a causal role in the losses suffered by many investors, brokerage companies and their advisors are being looked into for the roles they may have played in over-recommending the stocks.

Many investors don’t have time to research and evaluate all potential investments on their own so they rely on the advice of financial advisors often made available through retail brokerages.  Brokers have important legal obligations to the investors that they serve and one of those obligations is to make recommendations that are appropriate for the individual investor.  One of the ways that advisors violate this duty is when they make unsuitable recommendations.

In the case of Seadrill and Cobalt, there is reason to believe that advisors at some brokerages inappropriately recommended an overconcentration of these stocks.  In other words, they recommended that investors holdings in one or both of these companies make up an unduly high proportion of investor’s overall portfolio.  Typically if more than 25% of a portfolio is composed of the same stock or type of stocks over concentration exists.

Learn More

If you’re an investor that has experienced losses from investments in Cobalt or Seadrill, contact the nationally recognized securities attorneys at Silver Law Group today. We’d be happy to discuss your situation and help evaluate what legal remedies you might have.