Case 4:14-cv-03428 Document 72 Filed in TXSD on 05/01/15 Page 1 of 132 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION Lead Case No. 4:14-cv-3428 IN RE COBALT INTERNATIONAL CLASS ACTION ENERGY, INC. SECURITIES LITIGATION JURY TRIAL DEMANDED CONSOLIDATED AMENDED CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS Case 4:14-cv-03428 Document 72 Filed in TXSD on 05/01/15 Page 2 of 132 TABLE OF CONTENTS Page I. INTRODUCTION .............................................................................................................. 2 II. JURISDICTION AND VENUE ......................................................................................... 7 III. PARTIES ............................................................................................................................ 8 A. Plaintiffs..................................................................................................................8 B. The Corporate Defendant ........................................................................................ 9 C. The Executive Defendants ...................................................................................... 9 D. The Securities Act Defendants .............................................................................. 10 1. The Underwriter Defendants ..................................................................... 10 2. The Director Defendants ........................................................................... 11 3. The Controlling Entity Defendants ........................................................... 12 IV. SUMMARY OF THE ACTION ....................................................................................... 15 A. Overview of Cobalt ............................................................................................... 15 B. Angola’s Rich Oil Fields And The Role Of Sonangol ......................................... 17 C. Cobalt Enters Angola ............................................................................................ 20 D. Cobalt Denies Early Concerns About Its “Partners” ............................................ 28 E. Cobalt Continues To Assure Investors That Its Partners Are Legitimate............................................................................................................. 30 F. Cobalt’s Board Requires Management To Conduct An Internal Investigation That Shows A History Of Bribes In Angola By A Senior Cobalt Executive ....................................................................................... 31 G. Additional Questions Arise About Cobalt’s Partners, And Cobalt’s Insiders Sell Their Shares ..................................................................................... 34 H. The Financial Times Identifies The True Owners Of Nazaki And Alper, Which Cobalt Continues To Deny ............................................................. 36 I. Cobalt Deflects Attention From Its “Partners” By Touting Its Wells While Selling More Securities .................................................................... 39 J. Cobalt Is Forced To Disclose The Truth About Its Lontra “Oil” Well.......................................................................................................................42 i Case 4:14-cv-03428 Document 72 Filed in TXSD on 05/01/15 Page 3 of 132 K. With Lontra Exposed, Cobalt Focuses On Its Loengo Well And SellsMore Securities ............................................................................................ 44 L. The SEC Escalates Its Investigation, Cobalt’s “Social Payments” Are Revealed To Be For A Project That Does Not Exist, And Angola Removes Nazaki And Alper ..................................................................... 45 V. VIOLATIONS OF THE EXCHANGE ACT ................................................................... 49 A. Defendants’ Material Misstatements And Omissions In Violation OfThe Exchange Act ............................................................................................ 49 1. Defendants’ Materially False And Misleading Statements And Omissions In 2011 ............................................................................ 51 2. Defendants’ Materially False And Misleading Statements And Omissions In 2012 ............................................................................ 54 3. Defendants’ Materially False And Misleading Statements And Omissions In 2013 ............................................................................ 61 4. Defendants’ Materially False And Misleading Statements And Omissions In 2014 ............................................................................ 67 B. Additional Allegations of Defendants’ Scienter ................................................... 70 C. Loss Causation ...................................................................................................... 77 D. Presumption of Reliance ....................................................................................... 82 VI. VIOLATIONS OF THE SECURITIES ACT ................................................................... 83 A. The February 2012 Common Stock Offering ....................................................... 84 B. The December 2012 Bond Offering ..................................................................... 88 C. The January 2013 Common Stock Offering ......................................................... 91 D. The May 2013 Common Stock Offering .............................................................. 93 E. The May 2014 Bond Offering............................................................................... 94 VII. INAPPLICABILITY OF THE STATUTORY SAFE HARBOR AND BESPEAKS CAUTION DOCTRINE .............................................................................. 97 VIII. CLASS ACTION ALLEGATIONS ................................................................................. 98 IX. CLAIMS FOR RELIEF .................................................................................................. 100 COUNT I For Violations Of Section 10(b) Of The Exchange Act And Rule 10b-5 Against Cobalt And The Executive Defendants ............................................................. 100 COUNT II For Violations Of Section 20(a) Of The Exchange Act Against The ExecutiveDefendants ..................................................................................................... 102 ii Case 4:14-cv-03428 Document 72 Filed in TXSD on 05/01/15 Page 4 of 132 COUNT III For Violations Of Section 11 Of The Securities Act Against Cobalt, The Director Defendants And The Underwriter Defendants .......................................... 102 COUNT IV For Violations Of Section 15 Of The Securities Act Against The Control Person Defendants ............................................................................................. 106 COUNT V For Violations Of Section 12(a)(2) Of The Securities Act Against The UnderwriterDefendants .................................................................................................. 110 X. PRAYER FOR RELIEF ................................................................................................. 112 XI. JURY DEMAND ............................................................................................................ 113 iii Case 4:14-cv-03428 Document 72 Filed in TXSD on 05/01/15 Page 5 of 132 Lead Plaintiffs, GAMCO Global Gold, Natural Resources & Income Trust and GAMCO Natural Resources, Gold & Income Trust (together, “Lead Plaintiffs”) and additional Plaintiffs St. Lucie County Fire District Firefighters’ Pension Trust Fund (“St. Lucie FF”), Fire and Police Retiree Health Care Fund, San Antonio (“San Antonio Health”), Sjunde AP-Fonden (“AP7”), and Universal Investment Gesellschaft m.b.H. (“Universal”) (the “Additional Plaintiffs”; collectively, with Lead Plaintiffs, the “Plaintiffs”), bring this action pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 (the “Securities Act”) on behalf of themselves and all other persons or entities who purchased or otherwise acquired securities of Cobalt International Energy, Inc. (“Cobalt” or the “Company”) in the open market or pursuant or traceable to the Offerings during the period from March 1, 2011 through November 3, 2014, inclusive (the “Class Period”) and were damaged thereby (the “Class”). 1 Plaintiffs allege the following based upon personal knowledge as to themselves and their own acts and upon information and belief as to all other matters. Plaintiffs’ information and belief are based on the ongoing independent investigation of their undersigned counsel. This investigation includes a review and analysis of: (i) Cobalt’s public filings with the Securities and Exchange Commission (the “SEC”); (ii) research reports by securities and financial analysts; (iii) transcripts of Cobalt’s conference calls with analysts and investors; (iv) presentations, press releases, and reports; (v) news and media reports concerning the Company and other facts related to this action; (vi) data reflecting the pricing of Cobalt securities; (vii) consultations with relevant experts; (viii) information provided by former Cobalt employees; and (ix) other material and data 1 “Offerings” refers to: (i) the registered public offerings of stock on February 23, 2012, January 16, 2013 and May 8, 2013; (ii) the registered public offering of Cobalt 2.625% Convertible