Cabot Oil & Gas Corp. repeatedly downplayed the severity of investigations into alleged environmental violations to ensure the company’s stock price remained artificially high, according to a federal class-action lawsuit.

Filed on behalf of the Delaware County Employees Retirement System, the lawsuit alleges the misleading statements prevented investors from knowing the true potential civil and criminal liabilities Cabot faced. That caused investors to lose money after Cabot’s stock price fell once the issues were publicly revealed.

Cabot is an oil and gas company that is heavily involved in hydraulic fracturing — a process that uses high pressure to inject a large volume of water, chemicals and sand into the Marcellus Shale, causing it to crack and release natural gas.

The suit comes about four months after Pennsylvania Attorney General Josh Shapiro filed 15 charges against Cabot, alleging it failed to take steps to prevent methane gas from well pads constructed in Dimock Twp., Susquehanna County, from migrating into the drinking water supply. That case remains pending in Susquehanna County Court.

The lawsuit, filed in federal court in Scranton, alleges Cabot failed to adequately disclose legal woes it faced in documents filed with the Securities and Exchange Commission, which requires companies to disclose lawsuits or other investigations that could affect the value of their stock.

According to the suit, Cabot knew it faced serious environmental investigations as of Oct. 23, 2015. It failed to convey that in its SEC filings, stating only that “from time to time we receive notices of violation from government and regulatory authorities.” The “generic, boilerplate” language significantly downplayed the seriousness of the issues, the suit says.

“These risk warnings were generic, ‘catch-all’ provisions that were not tailored to Cabot’s actual known risks regarding the company’s inadequate environmental controls and procedures, much less its failure to fix faulty gas wells that were polluting Pennsylvania’s water supplies,” the suit says.

The suit also alleges Dan Dinges, Cabot’s CEO, cashed in $1.8 million worth of Cabot’s stock in November 2017, based on inside knowledge he had of the troubles the company faced.

The suit, filed by Lancaster attorney Lawrence Stengel, seeks to recover damages for the Delaware County Employee Retirement System as well as all other investors who held stock in the company from Oct. 23, 2015, to June 12. It also names Dinges and Scott Schroeder, the company’s CFO, as defendants.

Attempts to reach George Stark, spokesman for Cabot, were unsuccessful.

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