Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #: FILED I 0 0 GLANCY BINKOW & GOLDBERG LLP LIONEL Z. GLANCY (0) MICHAEL GOLDBERG (#) ROBERT V. PRONGAY (#0) Century Park East, Suite 00 Los Angeles, California 00 Telephone: (0) 0-0 Facsimile: (0)0-0 I Attorneys for Plaintiff I [Additional Counsel on Signature Page] 0 JUN PH : CLERK U.S. DISTRICT. COURT CENTRAL VIST, QECALJF.. LOS ANGELES UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA V I ow JEREMY KORZEN, Individually and Or 0. sv Behalf of All Others Similarly Situated, COMPLAINT FOR Plaintiff, VIOLATIONS OF THE FEDERAL SECURITIES LAWS V. TETRA TECH, INC., DAN L. BATRACK, and STEVEN M. BURDICK, Defendants. By CLASS ACTION DEMAND FOR JURY TRIAL S
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #: Plaintiff Jeremy Korzen ("Plaintiff"), individually and on behalf of all other persons similarly situated, by his undersigned attorneys, for his complaint against defendants, alleges the following based upon personal knowledge as to himself and his own acts, and information and belief as to all other matters, based upon, inter alia, the investigation conducted by and through his attorneys, which included, among other things, a review of the defendants' public documents, conference calls and announcements made by defendants, United States Securities and Exchange 0 Commission ("SEC") filings, wire and press releases published by and regarding Tetra Tech, Inc. ("Tetra" or the "Company"), analysts' reports and advisories about the Company, and information readily obtainable on the Internet. Plaintiff believes that substantial evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for discovery. NATURE OF THE ACTION. This is a federal securities class action on behalf of a class consisting of all 0 persons other than defendants who purchased or otherwise acquired Tetra securities between May, 0 and June, 0, both dates inclusive (the "Class Period"), seeking to recover damages caused by defendants' violations of the federal securities laws and to pursue remedies under 0(b) and 0(a) of the Securities Exchange Act of (the "Exchange Act") and Rules Ob- promulgated thereunder against the Company and certain of its top officials and/or directors. S
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #: 0 0.. Tetra is a publicly traded company headquartered in Pasadena, California. Tetra is a leading provider of consulting, engineering, program management, construction management, construction and technical services that focuses on addressing fundamental needs for water, the environment, energy, infrastructure and natural resources.. The Company derives a significant portion of its revenues from federal, state and local governments and agencies, including the Department of Homeland Security, U.S. Postal Service, States of California, Massachusetts and New York, as well as private sector clients such as Bechtel Power Corp., ConocoPhillips Co., and Ford Motor Co.. Upon completion of a particular task, the Company will bill its clients based on a previously agreed sum. Once billed, these amounts are included in the Company's billed accounts receivable, which represents amounts billed to clients that have not yet been collected. Unbilled accounts receivable represent revenue recognized butnot yet billed pursuant to contract terms or billed after the period end date.. The Company is subject to claims and equitable determinations by its clients, whereby previously billed work may require adjustments to prior billing invoices and/or further work by the Company without further compensation. General Accepted Accounting Principles ("GAAP") requires that these claims and equitable determinations be projected by the Company, and that Tetra Tech account for these potential charges to accounts receivable on an ongoing basis.
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #:0 I. 0 0. In the Company quarterly report filed with the SEC on May, 0, the Company stated: Most of our unbilled receivables at March, 0 are expected to be billed and collected within months. Unbilled accounts receivable at March, 0 and September 0, 0 include approximately $ million and $ million, respectively, related to claims and requests for equitable adjustment on contracts that provide for price redetermination, primarily with U.S. federal government agencies. These amounts are management's estimate of the most probable amount to be realized upon the conclusion of the claims settlement process. We regularly evaluate these claim amounts and record appropriate adjustments to operating earnings when collectability is deemed to have changed. No losses were recognized related to the collectability of claims during the second quarter and first half offiscal 0 and 0. Contract retentions represent amounts withheld by clients until certain conditions are met or the project is completed, which may be several months or years. The allowance for doubtful accounts is determined based on a review of client-specific accounts, and contract issues resulting from current events and economic circumstances. Billings in excess of costs on uncompleted contracts represent the amount of cash collected from clients and billings to clients on contracts in advance of revenue recognized. The majority of billings in excess of costs on uncompleted contracts will be earned within months. The non-current billings in excess of costs on uncompleted contracts are reported as part of our "Other long-term liabilities" on our condensed consolidated balance sheets.. Despite these ongoing duties, the Company utterly failed to take necessary charges to its accounts receivables and earnings due to a significant number of projects which were subject to claims and equitable charges by federal and state government clients.
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #: 0 0. Moreover, throughout the Class Period, the Company was subject to an overall decline in the Eastern Canadian mining and oil industry, resulting from large political and economic unrest in the region. The issues effecting the Eastern Canadian mining and oil industry included, poor economic conditions, including budget deficits, reduced customer spending and an on-going government investigation into political corruption in Quebec. Notwithstanding the Company's knowledge of the extent of the downturn in the Eastern Canadian market, the Company failed to inform investors the I extent to which Tetra Tech's revenues would be impacted by this decline. I. Indeed, On May, 0, TTEK held a conference call for analysts and investors regarding the Company's 0 second quarter earnings. During the call, Dan L. Batrack, TTEK's Chairman and Chief Executive Officer, noted that the mining I industry, especially in the regional markets in Eastern Canada, was experiencing significant challenges. Yet, despite these obvious, challenges, Batrack forecast net revenue of $ million to $ million, and diluted earnings per share of $0. to $0., for the third quarter of 0. 0. Throughout the Class Period, Dfendants made materially false and misleading statements regarding the Company's business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) claims by customers and cost overruns created an acute risk that the Company would need to take an earnings charge; and, (ii) decreasing demand for the Company's services would lead to project closures.
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #:. On June, 0, the Company shocked investors by issuing a press release revising its prior guidance for the third quarter of 0 to a loss of $0.0 to $0.0 per share, and disclosing: Tetra Tech plans to incur restructuring costs associated with its Eastern Canadian and mining operations in the third quarter 0. These costs are now estimated to be approximately $0 million in the third quarter, approximately $0 million of which are non-recurring. This increase is principally related to increased severance and office closure costs, to downsize these operations due to reduced project demand caused by poor economic conditions. Approximately two-thirds of these costs 0 are associated with Eastern Canada, and approximately one- third are associated with mining operations. Based upon these anticipated results, Tetra Tech is performing a goodwill impairment test on its Eastern Canadian and mining operations, and will update investors on the test results in the third quarter earnings release. In addition, Tetra Tech plans to incur charges to resolve certain project claims in its third quarter. During the quarter, Tetra Tech received adverse findings principally related to claims on four programs, and will consequently record a charge while it continues the dispute resolution processes. The claims are primarily related to change orders on lump-sum projects for certain U.S.. federal and state government customers that are 0 currently under significant budget pressure. These charges are estimated to be up to $ million, most of which are associated with accounts receivable. The charges will affect the revenue and profitability of all three reportable segments. In the third quarter, revenue, net of subcontractor costs, is now expected to range from $0 million to $0 million, and, based on these charges, diluted loss per share is expected to range from $0.0 to $0.0.
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #: 0 0. The Company provided no prior guidance regarding the sharp revenue declines in the Eastern Canadian segment of the Company's operations, or the large change orders and equitable adjustments which Tetra Tech's clients were requesting.. On this news, Tetra securities declined $. per share or %, to close at $.0 per share on June, 0.. As a result of defendants' wrongful acts and omissions, and the precipitous I decline in the market value of the Company's securities, Plaintiff and other Class I members have suffered significant losses and damages. JURISDICTION AND VENUE. The claims asserted herein arise under and pursuant to Sections 0(b), (a) and 0(a) of the Exchange Act ( U.S.C. j(b), n(a) and t(a)) and Rule lob- promulgated thereunder ( C.F.R. 0.Ob-).. This Court has jurisdiction over the subject matter of this action pursuant I Ito of the Exchange Act ( U.S.C. aa) and US -C... Venue is proper in this District pursuant to of the Exchange Act, U.S.C. aa and U.S.C. (b), as Tetra's headquarters are located within this District.. In connection with the acts, conduct and other wrongs alleged in this Complaint, defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, including but not limited to, the. United States mail, interstate telephone communications and the facilities of the national securities exchange.
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #: PARTIES. Plaintiff, as set forth in the attached. Certification, acquired Tetra securities at artificially inflated prices during the Class Period and has been damaged thereby. 0. Defendant Tetra is a Delaware corporation with its principal executive offices located at East Foothill Blvd., Pasadena, CA 0. Tetra's' common stock trades on the NASDAQ under the ticker symbol "TTEK.". Defendant Dan L. Batrack ("Batrack") is the Company's Chairman, Chief 0 Executive Officer and President.. Defendant Steven M. Burdick ("Burdick") is the Company's Executive Vice-President, Chief Financial Officer and Treasurer.. The defendants referenced above in j - are sometimes referred to herein as the "Individual Defendants." 0 SUBSTANTIVE ALLEGATIONS Backrouii. Tetra is a publicly traded company headquartered in Pasadena, CA. Tetra is a leading provider of consulting, engineering, program management, construction management, construction and technical services that focuses on addressing fundamental needs for water, the environment, energy, infrastructure and natural resources.
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #:. 0 0 Materially False and Misleading Statements Issued During the Class Period. On May, 0, the Company issued a press release announcing 0 Second Quarter Results, and reported net revenue of $. million, EBITDA of $. I million, operating income of $. million and diluted earnings per share of $0. and I forecasted diluted earnings per share of $0. to $0. for the third quarter of fiscal 0.. On May, 0 the Company filed a quarterly report for the period ended lapril, 0 on a Form 0-Q with the SEC signed by, among others, the Individual I Defendants and where it reiterated the Company's previously reported financial results and financial position.. On August, 0, the Company issued a press release announcing fiscal 0 Third Quarter and Annual Results, and reported third quarter net revenue of $. operating income of $. million and dilutôd earnings per share of $0.. In addition, the Company'reported - that its backlog was a record high $0 billion and cash generated from operations was $. million. The Company forecasted fourth quarter.fiscal 0 diluted earnings per share of $0. to $0.0.. On August, 0 the Company filed a quarterly report for the period ended July, 0 on a Form. 0-Q with the SEC signed by, among others, the Individual Defendants and where it reiterated the Company's previously reported financial results and financial position.
Case :-cv-0-svw-pla Document Filed 0// Page 0 of Page ID #: 0 0. On November, 0 the Company issued a press release announcing fourth quarter and fiscal year results for period ending September 0, 0. For the fourth quarter, the Company reported revenues of $. million, operating income of $. million, diluted earnings per share of $0., a record high backlog of $. billion and cash from operations of $. million. For the fiscal year, the Company reported revenue of $. billion, operating income of $. million, diluted earnings ier share of $. and cash from operations of $ million. In the November, 0 press release, the Company stated: Tetra Tech's Chairman and CEO, Dan Batrack commented, "Tetra Tech finished the year with a strong fourth quarter that resulted in % net revenue growth and 0% backlog growth. Based on net revenue, our international business is now the largest client sector and the fastest growth market, having grown % organically in the fourth quarter. Our record backlog, expansions into Brazil and oil & gas, and the realigned organization provide a solid foundation for continued growth in 0. On November, 0, the Company filed an annual report for the period ended September 0, 0 on a Form 0-K with the SEC signed by, among others, the Individual Defendants and where it reiterated the Company's previously reported I financial results and financial position. I 0... On January 0, 0, the Company issued a press release reporting results for the first quarter of fiscal 0.. The Company reported revenues of $. million, operating income of $. million, diluted earnings per share of $0. million, a
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #: backlog of $. billion and cash from operations of $. million. The Company also forecast the following: Tetra Tech expects diluted EPS for the second quarter of fiscal 0 to be in the range of $0. to $0.. Revenue, net of subcontractor costs, for the second quarter is expected to range from $00 million to $0 million. For fiscal 0, Tetra Tech is increasing guidance for its diluted EPS and revenue, net of subcontractor costs. Fiscal 0 EPS is now expected to range from $. to $.. Revenue, net of subcontractor costs, for fiscal 0 is expected to range from $. billion to $. billion. 0. On February, 0, the Company filed a quarterly report for the period 0 ended December 0 [sic], 0 on a Form 0-Q with the SEC signed by, among others, the Individual Defendants, where it reiterated the Company's previously reported financial results and financial position.. On May, 0, the Company issued a press release announcing fiscal 0 Second Quarter Results, and reported net revenue of $ million, EBITDA of $. million, operating income of $. million, diluted earnings per share of $0., a backlog of $.0 billion and cash generated from operations of $. million.. In the May,.0 press release, the Company stated: Tetra Tech's Chairman and CEO, Dan Batrack, commented, "We generated second quarter results that were in-line with our expectations and guidance. We continue to experience strong demand for our water and environmental services from commercial clients, especially with our oil & gas customers. U.S. commercial and international clients now represent % of our net revenue. - 0
I Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #: As Tetra Tech previously announced, due to anticipated weakness in Eastern Canada and mining, Tetra Tech is updating its guidance for fiscal 0. Tetra Tech expects diluted EPS for the third quarter of fiscal 0 to be in the range of $0. to $0.. Revenue, net of subcontractor costs, for the third quarter is expected to range from $ million to $ million. For fiscal 0, Tetra Tech now expects diluted BPS to be $.0 to $.. Revenue, net of subcontractor costs, for fiscal 0 is now expected to range from $. billion to $. billion. I I (Emphasis added.). On May, 0, the Company held a conference call with investors to 0 ii discuss the financial results of the prior quarter, and provide projections for future quarters. During the course of the conference call, Defendants Batrack and Burdick provided investors with a very rosy picture of the company's financial health and near term revenues and income. Defendants stated in relevant part: Overall, our second quarter results met our previous guidance that we had provided. Comparing, the second quarter results, this year to last year, revenue increased by about $ million or % to $ million, primarily as a result of an increase related to our oil and gas, and our commercial markets, both in the U.S. S 0 and abroad The increase was partially offset by a slowdown in' our federal government discretionary projects. Also, net revenue increased more significantly by about %, to $ million. The net revenue results were within our guidance range that we had previously given also. I do want to point out that our net revenue is growing faster than our revenue because we're involved in more self-performance work, especially in our commercial and international client base, and the selfperformance activity has benefited our bottom line. In fact, income from operations increased by about %, to $ million, on a year-over-year basis. We did experience a strong growth rate in operating income, and as previously mentioned, our top line growth is coming from these U.S. and international
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #: I 0 0 commercial activities, led by oil and gas work, and these activities do have higher margins; thus, our operating income is increasing at a pretty good rate. Our second quarter income is higher in spite of increased severance cost and decreased utilization in our ECS group as Dan had mentioned a little bit earlier. EBITDA also increased by about 0% to $ million. This improvement resulted in EBITDA margin increasing to about 0.%. This is better than the prior year for both the quarter and yer-to-date. Our EBITDA increased at a higher rate compared to our operating income due to intangible amortization expense of about $ million in the current quarter compared to last year. *** I would like to point out a few of the more significant balance sheet items. As a result of our revenue growth that we had experienced, we thus have higher accounts receivable balances and higher accounts payable balances based on that growth in our business. We did experience an increase in our net debt, and the primary driver for this was our recent acquisitions of both AEG and Parkland in the second quarter. Our net debt position was positively impacted by some very good cash flows in the quarter. It says we've got -- speaking of the good cash flows on the -- if you're following on the webeast, you'll see that we generated $. million of cash from operations in the quarter. This is about % more than the prior year quarter, and these improved results came from an increase in our EBITDA and better working capital. We expect that our operating cash flow for the year will still be about $0 million to $0 million for fiscal 0, and this translates to cash generated, on a per-share basis, of about $. to $., which is quite a bit more than our EPS guidance.
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #:0 0 0 Based on our performance in this past quarter, and evaluation of the current business trends and prospects, I've set our fiscal year 0 Q and updated our full year guidance as follows: For the third quarter, our guidance in revenue -- for net revenue is $ million to $ million with an associated diluted earnings per share of $0. to $0.. And I do recognize that this range is unusually wide for Tetra Tech, and the reason for that being wider in the second to third quarter is we expect to, on a prospective basis, make the reductions, the office closures, the back office reductions to mostly take place in the third quarter. In fact, our goal will be to it all complete and that's why we've left ourselves quite a wide range here. For the year, fiscal year, our net revenue guidance range is from $. billion to $. billion, with an associated diluted earnings per share of $.0 to $.. You do see that for the entire year, we expect approximately $ million -- $0., I'm sorry, $0. impact from intangible amortization, $0. stock expense and overall effective tax rate of % for the second half of the year. And one thing I do want to note, because of the intangible amortization, there is a very large disconnect between our GAAP EPS and cash per share, and I do expect this, as you've seen on Steve's presentation, a cash per share of somewhere between $. and $. per share.. These strong projections for the Company's future growth caused Tetra's share price to rise by $0. per share or almost %, to close on-may, 0 at $... On May, 0, the Company filed a quarterly report for the period ended March, 0 on a Form 0-Q with the SEC signed by, among others, the Individual Defendants and where it reiterated the Company's previously reported financial results and financial position.. The statements referenced in IT - above were materially false and/or misleading because they misrepresented and failed to disclose the following adverse
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #: 0 0 facts, which were known to defendants or recklessly disregarded by them, including: (i) claims by customers and cost overruns created an acute risk that the Company would need to take an earnings charge; and, (ii) decreasing demand for the Company's services would lead to project closures. THE TRUTH EMERGES 0. On June, 0, the Company issued a press release revising its prior guidance for the third quarter of 0 to a loss of $0.0 to $0.0 per share. The Company blamed the revision on an impairment charge of approximately $ million due to "change orders on lump-sum projects for certain U.S. federal and state government customers" and $0 to $0 million in restructuring costs related to its Eastern Canadian operations. The Company stated, in relevant part: Tetra Tech plans to incur restructuring costs associated with its Eastern Canadian and mining operations in the third quarter 0. These costs are now estimated to-be approximately $0 million in the third quarter, approximately $0 million of which are non-recurring. This increase is principally related to increased severance and office closure costs to downsize these operations due to reduced project demand caused by poor economic conditions. Approximately two-thirds of these costs are associated with Eastern Canada, and approximately onethird are associated with mining operations. Based upon these anticipated results, Tetra Tech is performing a goodwill impairment test on its Eastern Canadian and mining operations, and will update investors on the test results in the third quarter earnings release. In addition, Tetra Tech plans to incur charges to resolve certain project claims in its third quarter. During the quarter, Tetra Tech received adverse findings principally related to claims on four programs, and will consequently record a charge while it
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #: 0 0 II continues the dispute resolution processes. The claims are primarily related to change orders on lump-sum projects for certain U.S. federal and state government customers that are currently under significant budget pressure. These charges are estimated to be up to $ million, most of which are associated with accounts receivable. The charges will affect the revenue and profitability of all three reportable segments. In the third quarter, revenue, net of subcontractor costs, is now expected to range from $0 million to $0 million, and, based on these charges, diluted loss per share is expected to range from $0.0 to $0.0.. On this news, Tetra securities declined $. per share or.%, to close at $.0 per share on June, 0 on unusually high volume. PLAINTIFF'S CLASS ACTION ALLEGATIONS. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil Procedure (a) and (b)() on behalf of a Class, consisting of all those who purchased or otherwise acquired Tetra securities during the Class Period (the "Class"); and were damaged thereby. Excluded from the Class are defendants herein, the officers and directors of the Company, at all relevant times, members of their immediate families and their legal representatives, heirs, successors or assigns and any entity in which defendants have or had a controlling interest.. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, Tetra securities were actively traded on the NASDAQ. While the exact number of Class members is unknown to Plaintiff at this time and can be ascertained only through appropriate discovery, Plaintiff believes
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #: that there are hundreds or thousands of members in the proposed Class. Record owners and other members of the Class may be identified from records maintained by Tetra or its transfer agent and may be notified of the pendency of this action by mail, using the form of notice similar to that customarily used in securities class actions.. Plaintiff's claims are typical of the claims of the members of the Class as all members of the Class are similarly affected by defendants' wrongful conduct i n. violation of federal law that is complained of herein. 0 Plaintiff will fairly and adequately protect the interests of the members of the Class and has retained counsel competent and experienced in class and securities, litigation. Plaintiff has no interests antagonistic to or in conflict with those of the Class.. Common questions of law and fact exist as to all members of the Class and predominate over any questions solely affecting individual members of the Class. Among the questions of law and fact common to. the Class are: whether the federal securities laws were violated by defendants' acts as 0 alleged herein;' whether statements made by defendants to the investing public during the Class Period misrepresented material facts about the business, operations and management of Tetra; whether the Individual Defendants caused Tetra to issue false and misleading financial statements during the Class Period; whether defendants acted knowingly or recklessly in issuing false and misleading financial statements;
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #: i herein; and whether the prices of Tetra securities during the Class Period were artificially inflated because of the defendants' conduct complained of whether the members of the Class have sustained damages and, if so, what is the proper measure of damages.. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. 0 Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation make it impossible for members of the Class to individually redress the wrongs done to them. There will be no difficulty in the management of this action as a class action.. Plaintiff will rely, in part, upon the presumption of reliance established by the fraud-on-the-market doctrine in that: defendants made public misrepresentations or failed to disclose material facts during the Class Period; 0 the omissions and misrepresentations were material; Tetra securities are traded in an efficient market; the Company's shares were liquid and traded with moderate to heavy volume during the Class Period; the Company traded on the NASDAQ and was covered by multiple analysts; I
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #: 0 0 the misrepresentations and omissions alleged would tend to induce a reasonable investor to misjudge the value of the Company's securities; and Plaintiff and members of the Class purchased, acquired and/or sold Tetra securities between the time the defendants failed to disclose or misrepresented material facts and the time the true facts were disclosed, without knowledge of the omitted or misrepresented facts.. Based upon the foregoing, Plaintiff and the members of the Class are entitled to a presumption of reliance upon the integrity of the market. COUNT! (Against All Defendants For Violations of Section 0(b) and Rule lob-s Promulgated Thereunder) 0. Plaintiff repeats and realleges each and every allegation contained above las if fully set forth herein.. This Count is asseited against defendants and is based upon Section 0(b) of the Exchange Act,: the SEC. j(b), and Rule lob-s promulgated thereunder by. During the Class Period, defendants engaged in a plan, scheme, conspiracy and course of conduct, pursuant to which they knowingly or recklessly engaged in acts, transactions, practices and courses of business which operated as a fraud and deceit upon Plaintiff and the other members of the Class; made various untrue statements of material facts and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not
Case :-cv-0-svw-pla Document Filed 0// Page 0 of Page ID #: misleading; and employed devices, schemes and artifices to defraud in connection with the purchase and sale of securities. Such scheme was intended to, and, throughout the Class Period, did: (i) deceive the investing public, including Plaintiff and other Class members, as alleged herein; (ii) artificially inflate and maintain the market price of Tetra securities; and (iii) cause Plaintiff and other members of the Class to purchase or otherwise acquire Tetra securities and options at artificially inflated prices. In furtherance of this unlawful scheme, plan and course of conduct, defendants, and each 0 of them, took the actions set forth herein..pursuant to the above plan, scheme, conspiracy and course of conduct, each of the defendants participated directly or indirectly in the preparation and/or issuance of the quarterly and annual reports, SEC filings, press releases and other statements and documents described above, including statements made to securities analysts and the media that were designed to influence the market for Tetra securities. Such reports, filings, releases and statements were materially false and misleading in 0 that they failed to disclose material adverse information and misrepresented the truth II II about Tetra's finances and business prospects. II. By virtue of their positions at Tetra, defendants had actual knowledge of the materially false and misleading statements and material omissions alleged herein and intended thereby to deceive Plaintiff and the other members of the Class, or, in the alternative, defendants acted with reckless disregard for the truth in that they failed or refused to ascertain and disclose such facts as would reveal the materially false and
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #: misleading nature of the statements made, although such facts were readily available to defendants. Said acts and omissions of defendants were committed willfully or with reckless disregard for the truth. In addition, each defendant knew or recklessly disregarded that material facts were being misrepresented or omitted as described above. Information showing that defendants acted knowingly or with reckless disregard for the truth is peculiarly within defendants' knowledge and control. As the 0 senior managers and/or directors of Tetra, the Individual Defendants had knowledge of the details of Tetra's internal affairs.. The Individual Defendants are liable both directly and indirectly for the wrongs complained of herein. Because of their positions of control and authority, the Individual Defendants were able to and did, directly or indirectly, control the content of the statements of Tetra. As officers and/or directors of a publicly-held company, the Individual Defendants had a duty to disseminate timely, accurate, and truthful 0 information with respect to Tetra's businesses, operations, future financial condition and future prospects. As a result of the dissemination of the aforementioned false and misleading reports, releases and public statements, the market price of Tetra securities was artificially inflated throughout the Class Period. In ignorance of the adverse facts concerning Tetra's business and financial condition which were concealed by defendants, Plaintiff and the other members of the Class purchased or otherwise acquired Tetra securities at artificially inflated prices and relied upon the price of the 0
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #: securities, the integrity of the market for the securities and/or upon statements disseminated by defendants, and were damaged thereby.. During the Class Period, Tetra securities were traded on an active and efficient market. Plaintiff and the other members of the Class, relying on the materially false and misleading statements described herein, which the defendants made, issued or caused to be disseminated, or relying upon the integrity of the market, purchased or otherwise acquired shares of Tetra securities at prices artificially inflated by 0 defendants' wrongful conduct. Had Plaintiff and the other members of the Class known the truth, they would not have purchased or otherwise acquired said securities, or would not have purchased or otherwise acquired them at the inflated prices that were paid. At the time of the purchases and/or acquisitions by Plaintiff and the Class, the true value of Tetra securities was substantially lower than the prices paid by Plaintiff and the other members of the Class. The market price of Tétra. securities declined sharply upon public disclosure of the facts alleged herein to the injury of Plaintiff and 0 Class members.. By reason of the conduct alleged herein, defendants knowingly or recklessly, directly or indirectly, have violated Section 0(b) of the Exchange Act and Rule lob- promulgated thereunder.. As a direct and proximate result of defendants' wrongful conduct, Plaintiff and the other members of the Class suffered damages in connection with their respective purchases, acquisitions and sales of the Company's securities during the
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #: Class Period, upon the disclosure that the Company had been disseminating misrepresented financial statements to the investing public. COUNT II (Violations of Section 0(a) of the Exchange Act Against The Individual Defendants) 0. Plaintiff repeats and realleges each and every allegation contained in the foregoing paragraphs as if fully set forth herein.. During the Class Period, the Individual Defendants participated in the operation and management of Tetra, and conducted and participated, directly and indirectly, in the conduct of Tetra's business affairs. Because of their senior positions, they knew the adverse non-public information about Tetra's misstatement of income and expenses and false financial statements.. As officers and/or directors of a publicly owned company, the Individual Defendants had a duty to disseminate accurate and truthful information with respect to Tetra's financial condition and results of operations, and to correct promptly any public 0 statements issued by Tetra which had become materially false or misleading.. Because of their positions of control and authority as senior officers, the Individual Defendants were able to, and did, control the contents of the various reports, press releases and public filings which Tetra disseminated in the marketplace during the Class Period concerning Tetra's results of operations. Throughout the Class Period, the Individual Defendants exercised their power and authority to cause Tetra to engage in
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #:0 0 0 the wrongful acts complained of herein. The Individual Defendants therefore, were "controlling persons" of Tetra within the meaning of Section 0(a) of the Exchange Act. In this capacity, they participated in the unlawful conduct alleged which artificially inflated the market price of Tetra securities.. Each of the Individual Defendants, therefore, acted as a controlling person of Tetra. By reason of their senior management positions and/or being directors of Tetra, each of the Individual Defendants had the power to direct the actions of, and exercised the same to cause, Tetra to engage in the unlawful acts and conduct complained of herein. Each of the Individual Defendants exercised control over the general operations of Tetra and possessed the power to control the specific activities which comprise the primary violations about which Plaintiff and the other members of the Class complain.. By reason of thern above conduct,. the Individual Defendants are liable pursuant to Section 0(a) of the Exchange Act for the violations committed by Tetra. PRAYER FOR RELIEF WHEREFORE, Plaintiff demands judgment against defendants as follows: A. Determining that the instant action may be maintained as a class action under Rule of the Federal Rules of Civil Procedure, and certifying Plaintiff as the Class representative; - B. Requiring defendants to pay damages sustained by Plaintiff and the Class by reason of the acts and transactions alleged herein;
Case :-cv-0-svw-pla Document Filed 0// Page of Page ID #: 0. 0 C. Awarding Plaintiff and the other members of the Class prejudgment and post-judgment interest, as well as their reasonable attorneys' fees, expert fees and other costs; and proper. In Awarding such other and further relief as this Court may deem just and DEMAND FOR TRIAL BY JURY Plaintiff hereby demands a trial by jury. Dated: June, 0 GLANCY BINKOW & GOLDBERG LLP By: Lionel Z. Glancy Michael Goldberg Robert V. Prongay Century Park East, Suite 00 Los Angeles, California 00 Telephone: (0) 0-0 Facsimile: (0)0-0 info glancyaw.00m POMERANTZ GROSSMAN JIJFFORD DAHLSTROM & GROSS LLP Jeremy A. Lieberman Lesley F. Portnoy 00 Third Avenue, 0th Floor New York, New York 00 Telephone: () -00 Facsimile: () - rnigross pomlaw.c0m jalieberman@pomiaw. 00m