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Univ. of Toledo College of Law

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Monday, June 8, 2009

SEC Charges Warrior Energy Director with Tipping Information about Merger

On June 8, 2009, the SEC filed a Complaint for Injunctive and Other Relief ("Complaint") in the United States District Court for the Western District of Louisiana against Robert L. Hollier ("Hollier") and Wayne A. Dupuis ("Dupuis"). This matter involves insider trading in the securities of Warrior Energy Services Corporation ("Warrior Energy") by Dupuis, who received tips directly or indirectly from Hollier, a member of Warrior Energy's board of directors.

The Complaint alleges that during the latter part of August 2006, Hollier had knowledge of pending merger talks between Warrior Energy and Superior Energy Services, Inc. ("Superior Energy"). The information constituted material nonpublic information. Hollier tipped Dupuis about the pending merger during a Canada hunting trip that Hollier and Dupuis both attended. The Complaint further alleges that on September 18, 2006, the day he returned from the hunting trip, Dupuis purchased 5,000 shares of Warrior Energy stock for approximately $85,000. Dupuis, who had no prior history of trading Warrior Energy shares, sold the only two stocks in his portfolio to buy the Warrior Energy shares. The Complaint further alleges that on September 25, 2006, Warrior Energy announced a definitive merger agreement with Superior Energy. The Warrior Energy shares, which were then traded on the Nasdaq National Market, increased in price by almost 70% on the news that day. The Complaint also alleges that on October 3, 2006, Dupuis sold all of his Warrior Energy stock for a profit of approximately $41,800.

The Complaint alleges that the defendants have violated the antifraud provisions of the federal securities laws, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission's Complaint seeks (i) a permanent injunction against future violations; (ii) disgorgement of ill-gotten gains plus prejudgment interest; and (iii) imposition of civil penalties.

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