Underwriters of Macquarie Offering Win Dismissal of Securities Class Action

Paul, Weiss won the dismissal of securities fraud claims against Barclays Capital Inc., underwriters of a secondary public offering by Macquarie Infrastructure Corporation in November 2016. Macquarie owns and operates various infrastructure business, including International-Matex Tank Terminals (IMTT), a bulk liquid terminals business that provides storage and handling services for petroleum products. Claims against Macquarie, represented by co-defense counsel, were also dismissed.

In their putative securities class action, filed in April 2018 in the Southern District of New York, the plaintiffs alleged that Macquarie concealed from investors that over 40% of IMTT’s storage capacity was dedicated to storing No. 6 fuel oil, a category of heavy and residual fuels that was threatened by pending regulation scheduled to take effect in January 2020. The offering documents in connection with the secondary public offering did not mention the demand for storage for No. 6 fuel oil or the upcoming regulation.

At the end of 2017, a number of existing IMTT customers did not renew their contracts for No. 6 oil storage. In February 2018, Macquarie announced a decision to reduce its 2018 dividend guidance, which led to a drop in Macquarie’s stock price of over 40% that same day. The plaintiffs alleged that Macquarie, its management company, officers and directors, and the underwriters of Macquarie’s November 2016 secondary offering were liable under Sections 10(b), 20(a), and 20A of the Securities Exchange Act and Sections 11, 12(a)(2), and 15 of the Securities Act.

In its decision dismissing all claims, the court held that the plaintiffs failed to allege any false statements or omissions, because none of the alleged misstatements was actually false, and none was literally true but misleading absent a disclosure about how much No. 6 fuel oil IMTT’s facilities could store.

The Paul, Weiss team included litigation partner Susanna Buergel.