NEW YORK, Sept. 1, 2017 /PRNewswire/ -- Kaplan Fox & Kilsheimer LLP (www.kaplanfox.com) is investigating claims on behalf of investors of DryShips Inc. ("DryShips" or the "Company") (NASDAQ: DRYS).
Class action litigation has been filed in the United States District Court for the Eastern District of New York against DryShips and certain Company officers on behalf of investors who purchased DryShips common stock between June 8, 2016 and July 14, 2017, inclusive (the "Class"), alleging violations of the Securities Exchange Act of 1934. The complaint alleges that throughout the Class Period, the defendants made materially false and misleading statements and failed to disclose that the defendants were engaged in a wrongful stock manipulation scheme.
On July 13, 2017, The Wall Street Journal published an article entitled "A Shipping Company's Bizarre Stock Maneuvers Create High Seas Intrigue." The article describes in detail the various transactions between DryShips and Kalani Investments Ltd. ("Kalani"), a British Virgin Islands firm. Allegedly, DryShips raised hundreds of millions of dollars of capital in a series of transactions beginning on or around June 8, 2016 by selling newly-issued shares to Kalani at a significant discount to the stock-market price. The cash injected into the Company by the dilutive offerings was used to buy ships from DryShips' CEO, Chairman and founder, George Economou ("Economou") who had purchased ships from the Company the prior year when the Company was low on cash. After each sale of shares to Kalani, Kalani would quickly dump shares to the investing public, thereby causing a decline in the price of DryShips' common stock. Further, The Wall Street Journal article reports that in an apparent effort to counter the downward pressure that each new supply of shares put on the stock price, DryShips used reverse stock splits to increase the per share price and prevent its stock price from falling below $1 to avoid being delisted from the NASDAQ. Kalani ultimately acquired securities convertible to more than $626 million in DryShips common stock, or roughly 100 times DryShips' stock market value as of early November 2016. According to the The Wall Street Journal, a $10,000 investment in DryShips stock at the beginning of November 2016 was worth $167,000 during a brief price spike in mid-November 2016, but only about $2 by the time the article was published on July 13, 2017. In fact, the Company's stock price has dropped more than 99.9% since early 2017.
Additionally, The Wall Street Journal article reports that since Kalani purchased DryShips' stock with the intention of reselling it, the transactions between DryShips and Kalani essentially constituted "pseudo-underwriting", with Kalani in the position of the underwriter of a de facto public offering. Kalani, however, never registered as an underwriter with the Securities and Exchange Commission ("SEC"), which is potentially a violation of federal securities laws according to The Wall Street Journal.
On August 30, 2017 after the market closed, DryShips disclosed that it had received a subpoena from the SEC requesting certain documents and information in connection with offerings made by the Company between June 2016 and July 2017. Following this news, DryShips' shares declined by 10.53% to close at $2.72 per share on August 31, 2017.
If you are a member of the proposed Class, you may move the court no later than September 12, 2017 to serve as a lead plaintiff for the purported class. You need not seek to become a lead plaintiff in order to share in any possible recovery. If you would like to discuss the complaint or our investigation, please contact us by emailing email@example.com or by calling 800-290-1952.
This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and ethical rules.
Kaplan Fox & Kilsheimer LLP, with offices in New York, San Francisco, Los Angeles, Chicago and New Jersey, has many years of experience in prosecuting investor class actions. For more information about Kaplan Fox & Kilsheimer LLP, you may visit our website at www.kaplanfox.com. If you have any questions about this Notice, the action, your rights, or your interests, please contact:
Robert N. Kaplan
KAPLAN FOX & KILSHEIMER LLP
850 Third Avenue, 14th Floor
New York, New York 10022
Fax: (212) 687-7714
Laurence D. King
KAPLAN FOX & KILSHEIMER LLP
350 Sansome Street, Suite 400
San Francisco, California 94104
Fax: (415) 772-4707
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SOURCE Kaplan Fox & Kilsheimer LLP