Shareholders Sue Oil Driller Continental CEO Over Pipeline Investment

The lawsuit is not likely to discourage investors who are bullish on Continental's oil production growth, say analysts.

Conflicts of Interest

The disclosure of related-party business in SEC filings is not enough to protect a company like Continental from lawsuits, a corporate governance expert said.

"Whether you disclosed it or not, the question remains: Were the transactions injurious to the shareholders?" said Roy Smith, a finance professor at the Leonard N. Stern School of Business at New York University.

Alleged conflicts of interest have sparked previous lawsuits by minority shareholders in Hamm's firms.

In 2009, Hamm was sued by other shareholders in Hiland Partners, who alleged he struck a deal to repurchase publicly traded shares of the firm at depressed prices.

That suit was dropped in 2010 after Hiland increased the purchase price of the shares. Attorneys representing Hamm denied the legal action prompted the move.

In 2012, minority shareholders in Continental sued after the company approved a $340 million deal to buy well interests owned by Hamm and another Continental executive, through a company called Wheatland Oil. The lawsuits alleged the purchase price was inflated.


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