Magistrate Judge James Francis
Between 2004 and 2006 Weatherford’s effective income tax rate increased from 22 to 26 percent. From 2007 to 2011 it reported a sharply lower effective tax rate resulting in higher per share earnings. Plaintiffs bought stock in Weatherford between April 25, 2007, and March 1, 2011 (Class Period). Share values dropped sharply after Weatherford’s March 2011 determination that it understated its tax expenses for 2007-2010 by $500 million. Weatherford’s March 2012 restatement of earnings again revised its tax expenses upward through the Class Period. Plaintiff investors asserted Weatherford’s officers made false and misleading statements. Another judge previously sustained plaintiffs’ claims relating to statements by Weatherford’s chief executive and chief financial office attesting to the quality of Weatherford’s internal controls for financial reporting. The magistrate judge granted plaintiffs’ motion to compel testimony from Weatherford. To the extent that Weatherford’s March 2012 and December 2012 restatements identified control deficiencies present during the Class Period and which were inconsistent with prior statements about the robustness of those controls, the restatements were plainly relevant.
