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Lie's Research Used in Suit Against Canadian Company

A shareholder in Savanna Energy, a Calgary-based oil driller, has launched a lawsuit claiming that while shareholders suffered through wild price swings, Savanna's executives and directors manipulated their own stock options, profiting to the tune of at least $2.8 million. The claim launched by shareholder Brian Fenn asks for damages equal to the alleged ill-gotten gains and an immediate ban on issuing options to Savanna executives. It comes after the company's board refused to launch a probe into the allegations, say documents filed in Alberta's Court of Queen's Bench. Mr. Fenn's claim -- launched on behalf of Savanna -- rests largely on research conducted by ERIK LIE, an associate professor of finance at the University of Iowa. In an affidavit, Mr. Lie says he analyzed trading of Savanna shares and publicly available information about stock options granted to the junior oil driller's senior executives and board members. Based on that research, there is a "high statistical probability" that between 2004 and 2007 individuals at Savanna -- the claim doesn't specify whom -- "knowingly or negligently" backdated stock options so the price at which executives bought and subsequently sell their shares was below the stock's market price, violating stock exchange rules and generating an illegal profit, court documents allege. The National Post is published in Canada. The same story was published on the Web site of the FINANCIAL POST.

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