National Bank faces potential class action lawsuits over Poseidon

TORONTO – National Bank of Canada (TSX:NA) is facing two potential class-action lawsuits in connection to Poseidon Concepts Corp. (TSX:PSN), which has said up to $106 million in revenue should not have been recorded as such in 2012.

The applications for leave, filed Wednesday with the Ontario Superior Court of Justice by Siskinds LLP, name National Bank and the underwriters of Poseidon’s securities as defendants and allege that they misrepresented the value of the oilfield services company’s securities.

National Bank Financial Inc., a subsidiary of National Bank of Canada, was the lead underwriter of a January 2012 share offering.

The allegations have not been tested in court.

A spokesman for National Bank said they “intend to vigorously defend against these allegations.”

Last week, Poseidon announced it will restate its financial results for the first, second, and third quarters of 2012.

Poseidon said approximately $95 million to $106 million of the $148.1 million in revenue for the nine months ended Sept. 30 should not have been recorded as revenue. It also said that approximately $94 million to $102 million of its $125.5 million in accounts receiveable as of Sept. 30 should not have been recorded as such.

The announcement saw shares in Poseidon became the most heavily traded issue on the Toronto Stock Exchange that day, with a volume of 15.58 million shares. The stock closed down 62 cents, or 69.66 per cent to 27 cents.

Its 52-week high had been $16.87.

The Alberta Securities Commission issued a cease trade order against the Calgary company the next day.

On Wednesday, Poseidon confirmed it is in default of its loan agreement dated June 29, 2012 and that it’s in discussions with its lenders.

The company rents large tanks used by the oil and gas industry to hold fracturing fluids and other liquids.