Mammoth Energy Services, Inc. (TUSK) Subsidiary’s Contracts Are Being Investigated
According to the complaint for alleged violations of the Securities Exchange Act of 1934 between October 19, 2017 and June 5, 2019, Mammoth Energy Services, Inc. (TUSK) failed to disclose that its subsidiary, Cobra Acquisitions LLC, had entered into two contracts totaling approximately $1.8 billion of services with Puerto Rico Electric Power Authority (“PREPA”) to aid in Puerto Rico’s rebuilding efforts. In May 2019, the Wall Street Journal revealed that the Department of Homeland Security was investigating FEMA Deputy Regional Administrator, who was placed on administrative leave, over allegations that she steered work to Cobra. On this news, Mammoth’s shares fell over 10% over the next three trading days. Then, in June 2019, The Wall Street Journal published another article reporting that the FBI had opened a related criminal inquiry into the origin of Cobra’s contracts with PREPA. On this news, Mammoth’s shares fell over 45% over the next two trading days to close at $6.11 per share on June 6, 2019, and have yet to recover.
