A California federal judge disqualified Levi & Korsinsky from serving as lead counsel in a proposed investor class action after finding that the firm issued press releases to attract clients with headlines stating it had filed certain suits when in fact, the firm hadn't actually filed those cases.

At a hearing last week, U.S. District Judge Stephen V. Wilson denied Levi & Korsinsky LLP's lead plaintiff bid in the shareholder action against oil and gas company Sable Offshore Corp. after finding certain of the firm's press releases were "designed to attract clients on a false premise."

At issue were at least six press releases with titles stating that Levi & Korsinsky had filed the Sable investor suit. Levi & Korsinsky lawyer Adam Apton admitted the firm sent releases with erroneous subject lines, but said at a hearing that the errors were "inadvertent," according to a transcript of the Oct. 27 hearing in a federal court in Los Angeles, viewed by Law360.

But Judge Wilson wasn't persuaded, saying "the false press releases were not a mistake."

"I think this shows a lack of honesty and integrity. And to me, that is adequate to support the argument, notwithstanding the firm's interest in the largest stakeholder, that they are not — they are disqualified from being lead counsel," Judge Wilson said at the hearing, according to the transcript.

Judge Wilson appointed Rosen Law Firm PA to represent the putative investor class in the matter.

His decision followed a challenge to Levi & Korsinsky's lead plaintiff bid in the Sable matter from Rosen Law.

In an Oct. 6 filing, Rosen Law asserted that Levi & Korsinsky had violated California's Rules of Professional Conduct by claiming in "at least six separate press releases" it had filed the case at hand. Court records show Rosen Law Firm filed the Sable suit in July.

"L&K's issuance of false advertising claiming it has 'filed a case' is not an accident," Rosen Law Firm said, accusing Levi & Korsinsky of doing it "to reach investors who wish to be represented by the counsel that actually filed a lawsuit" and to land higher than its competitors in search engine results.

At the Oct. 27 hearing to appoint lead counsel, Apton of Levi & Korsinsky said the errors were "absolutely not intentional," noting that the "only inaccurate aspect of the [press] release is the title that said my firm 'filed' or 'files' a release."

Apton also referenced the May departure of a senior employee in the firm's marketing department, asserting that after the employee left her job at the firm, "there were a couple of titles … in our press release system that were incorrect."

"There was a typo in two titles of the press releases that said 'files' or 'filed' inadvertently. Those titles on the press releases hung around. We overlooked them. It was a clerical oversight," Apton said at the hearing, according to the transcript.

Judge Wilson rejected that argument, telling Apton that "given the frequency over a period of time that these releases occurred and the clear evidence that they were false, I don't accept the argument that it was some former employee's clerk error."

The firm also asserted that its client in the Sable matter, Ferdinand Aggenbach, had been "well aware" that Levi & Korsinsky didn't file the case when the firm spoke to him before the investor retained his counsel.

In a Tuesday statement to Law360, Apton said "our priority is investor representation and I hope that investors, in this case, recover what they should."

Counsel for Rosen declined to comment Tuesday, and counsel for Sable and the underwriters did not immediately respond to requests for comment.

The case itself takes aim at Sable, two of its executives and its underwriters, and asserts the company hurt investors by overpricing a secondary public offering after misrepresenting it had restarted oil production at a field off the coast of California.

According to Sable investor Tracy Johnson, who launched the suit, Sable improperly raised $295 million by announcing the offering after tricking investors about the status of production at the company's offshore Santa Ynez production unit.

Aggenbach claimed in his filings that he had lost nearly $255,000 in connection with the securities fraud alleged in the suit.

Two other movants sought to represent the proposed class. The Rosen Law Firm's client Jimmy Cleveland White claimed losses of under $7,900 in connection with the alleged fraud, and investor Christoph Ludwig, who is represented by Hagens Berman Sobol Shapiro LLP, claimed he lost about $1,550 in connection with the fraud. Ludwig, however, has filed a notice of nonopposition to appointment of other movants with greater financial interests in the litigation.

At the hearing, Judge Wilson also rejected Rosen Law's proposal to co-lead the litigation with Schall Law Firm.

"I'm not going to appoint another law firm" in a matter that "doesn't look like a terribly complicated case," he said.

Ferdinand Aggenbach is represented by Adam M. Apton of Levi & Korsinsky LLP.

Jimmy Cleveland White is represented by Laurence M. Rosen and Phillip Kim of Rosen Law Firm PA, and Brian Schall and Adam L. Rosen of Schall Law Firm.

Christoph Ludwig is represented by Reed R. Kathrein and Lucas E. Gilmore of Hagens Berman Sobol Shapiro LLP.

The underwriter defendants, including J.P. Morgan Securities LLC, Jefferies LLC, Johnson Rice and Co. LLC, PEP Advisory LLC, Roth Capital Partners LLC, TD Securities USA LLC, The Benchmark Co. LLC and Tuohy Brothers Investment Research Inc. are represented by Robert Sacks, Andrew Finn and Nikki Long of Sullivan & Cromwell LLP.

Sable Offshore Corp. and individual defendants James C. Flores and Gregory D. Patrinely are represented by Colleen C. Smith, Kristin N. Murphy and Lauren C. Barnett of Latham & Watkins LLP.

The case is Tracy Johnson v. Sable Offshore Corp. et al., case number 2:25-cv-06869, in the U.S. District Court for the Central District of California.