USA: Lieff Cabraser Investigates Possible Securities Fraud at GLDD
The law firm of Lieff Cabraser Heimann & Bernstein, LLP is investigating potential accounting and securities fraud at Great Lakes Dredge & Dock Corporation.
Background on the Great Lakes Investigation
Located in Oak Brook, Illinois, Great Lakes is the largest provider of dredging services in the United States and a major provider of commercial and industrial demolition and remediation services. For the year ended December 31, 2012, Great Lakes reported Revenue of $687.6 million (9.6% increase from previous year), Net Loss of $2.7 million and Adjusted EBITDA of $60.9 million. For the year ended December 31, 2011, Great Lakes reported Revenue of $627.3 million, Net Income of $16.5 million and adjusted EBITDA $93.7 million.
On March 14, 2013, the Company disclosed it had recognized revenue in 2012 in a manner not consistent with its accounting policy. It further revealed “a failure of internal controls to detect or prevent misstatements in [its] financial statements,” which was “material to [its] results of operations for the quarterly and year-to-date periods ended June 30, 2012 and September 30, 2012.”
The Company disclosed a “material weakness” in its disclosure controls, described as a deficiency (or series of deficiencies) in internal controls over financial reporting such that there is a reasonable possibility that a material misstatement of Great Lakes’ annual or interim financial statements will not be prevented or detected on a timely basis. The Company further revealed that “2012 second and third quarter demolition segment revenues were overstated by $3.9 million and $4.3 million, respectively.”
On that same day, Great Lakes’ President and Chief Operating Officer, Bruce J. Biemeck, departed the Company. Biemeck previously served in 2012 as CFO to the Company.
Following these revelations, Great Lakes’ share price plummeted, losing approximately 20% of its value and resulting in approximately $100 million in investor losses.
Press Release, March 20, 2013