In the Middle of Jury Trial, Robbins Geller Secures $126.3 Million for SPAC Investors

Three weeks into a jury trial in federal court in Houston, Texas, Robbins Geller Rudman & Dowd LLP and co-lead trial counsel from Entwistle & Cappucci LLP secured a $126.3 million recovery for investors in a securities fraud class action against Alta Mesa – a high-profile and now-bankrupt “special purpose acquisition company” or “SPAC.” The settlement came in the midst of a multi-week jury trial involving Alta Mesa Resources, Inc., certain of its officers, directors, and board members, and the private equity firm Riverstone Holdings.

The proposed settlement would represent the largest-ever securities fraud class action recovery involving a SPAC, if approved by the court.

“We’re thrilled with the result for our client and the other investors. Trial brings a lot of clarity, and the recovery here is the direct result of our client’s willingness to allow us to try the case,” said Trig Smith, lead counsel for the investors.

The Case Against Alta Mesa

Alta Mesa, previously known as Silver Run II, was a SPAC sponsored by the private equity firm Riverstone. A SPAC is a publicly traded company, but one that is formed and operated much differently than a company brought public via a traditional initial public offering. Often called a “blank check” company, a typical SPAC completes an initial public offering of shares to investors and thereafter acquires a target business or assets. In most SPAC deals, if the new company doesn’t acquire a target business within a specified period of time, it is obligated to liquidate and return capital to its investors – a feature that has led to regulatory scrutiny of SPAC transactions. Several high-profile SPAC offerings have resulted in serious allegations of fraud and misconduct, collectively costing investors billions of dollars in investment losses.

One of Riverstone’s partners, James T. Hackett, served as CEO of Silver Run II. Beginning in August 2017, Silver Run II and Alta Mesa Holdings’ (“AMH”) CEO, Harlan Chappelle, proposed to purchase and merge two energy companies operating in Oklahoma, AMH and Kingfisher Midstream (“Kingfisher”). Between August 2017 and January 2018, Riverstone and Messrs. Hackett and Chappelle engaged in a proxy roadshow to solicit approval from Silver Run II shareholders for the proposed merger. Plaintiffs’ suit alleges that, to induce shareholders to vote yes on the deal on February 6, 2018, Riverstone, Mr. Hackett, and AMH (together with related executives and other entities) made numerous false and misleading statements to their investors, including earnings projections that overstated the value of AMH and Kingfisher.

Within weeks of approval of the deal, the defendants made a series of downward adjustments to 2018 earnings projections and later admitted that Alta Mesa had been aware of the conditions that led to the adjustments. Only one year after the creation of Alta Mesa, the company had to take a substantial write-down on the business combination and ultimately filed for Chapter 11 bankruptcy protection in September 2019.

The Trial and Resolution

Robbins Geller filed suit on behalf of investors against Alta Mesa and certain directors and board members and Riverstone in January 2019. 

Trial commenced on November 6, 2024 before the Honorable George C. Hanks, Jr. of the United States District Court for the Southern District of Texas. Several defendants, including investment firm HPS Investment Partners, LLC and private equity firm Bayou City Energy Management, LLC, settled with investors just prior to the commencement of the trial. As part of the proposed settlement, the defendants in the case collectively agreed to pay investors $126.3 million.

“While it may be true that the majority of complex fraud cases don’t go to a jury, some of the best results we’ve obtained for investors have come on the eve of or during trial,” said Darren Robbins, one of the lawyers for investors. “As we have seen here, deploying a trial team ready to present a convincing case to the jury makes a real difference.”

Earlier this year, Robbins Geller trial teams secured record recoveries in several cases on the eve of jury trial, including:

• Under Armour: Robbins Geller secured a $434 million recovery in a securities fraud class action case against Under Armour and its CEO alleging the defendants made false and misleading statements to investors about the company’s business and operations. The settlement is the second-largest ever securities class action recovery in the Fourth Circuit and is among the top 50 largest such recoveries in U.S. history.
• Apple: The Firm secured a $490 million recovery in a securities fraud class action case against Apple alleging CEO Tim Cook made false and misleading statements to investors regarding the state of the company’s business in China. The recovery is the third-largest securities class action recovery ever in the Northern District of California and the fifth-largest such recovery ever in the Ninth Circuit.

Robbins Geller attorneys Trig Smith, Tor Gronborg, John M. Kelley, and Stephen Johnson represent the plaintiffs.

About Robbins Geller

Robbins Geller Rudman & Dowd LLP is one of the world’s leading complex class action firms, representing plaintiffs in securities fraud, shareholder derivative, antitrust, corporate takeover, and consumer fraud and privacy cases. With 200 lawyers in 10 offices, Robbins Geller is one of the world’s largest plaintiffs’ firms and the Firm’s attorneys have obtained many of the largest securities, antitrust, and consumer class action recoveries in history.

Over the last decade, our Firm has been ranked #1 on the ISS Securities Class Action Services law firm rankings for six out of the last ten years for securing the most monetary relief for investors. In the last four years, Robbins Geller recovered $6.6 billion for investors in securities-related class action cases – over $2.2 billion more than any other law firm during that time. The Firm secured the largest-ever securities fraud class action settlement – $7.2 billion – in In re Enron Corp. Securities Litigation.

For media inquiries, please contact media@rgrdlaw.com or call (619) 338-3821.

In re Alta Mesa Resources, Inc. Securities Litigation, No. 4:19-cv-00957 (S.D. Tex.).