UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

x In re CARBO CERAMICS, INC. STOCK : Master File No. 1:12-cv-01034-LLS AND OPTIONS SECURITIES LITIGATION :

: CLASS ACTION

This Document Relates To: : CONSOLIDATED AMENDED CLASS : ACTION COMPLAINT FOR VIOLATIONS

ALL ACTIONS. : OF FEDERAL SECURITIES LAWS

x

Lead Plaintiffs Richard Goldman, on behalf of the Stock Class, and Michael Percoco, on

behalf of the Options Class, (together, “Lead Plaintiffs”) have alleged the following based upon the

investigation of Lead Plaintiffs’ counsel, which included, without limitation, a review of United

States Securities and Exchange Commission (“SEC”) filings by Carbo Ceramics Inc. (“Carbo” or the

“Company”), as well as regulatory filings and reports, securities analysts’ reports and advisories

about the Company, press releases and other public statements issued by the Company, media

reports about the Company and other related non-parties, and consultation with a transportation

expert specializing in rail transportation for the oil and gas industry. Many additional facts

supporting the allegations herein are known only to the defendants and/or are within their exclusive

custody or control. Lead Plaintiffs believe that substantial additional evidentiary support will exist

for the allegations set forth herein after a reasonable opportunity for discovery.

NATURE OF THE ACTION

1. This is a federal class action on behalf of investors who suffered damages as a result

of their purchases of Carbo common stock (the “Stock Class”) and investors who suffered damages

as a result of their purchases or sales of Carbo options contracts (the “Options Class”) between

October 27, 2011 and January 26, 2012, inclusive (the “Class Period”), which seeks to pursue

remedies under the Securities Exchange Act of 1934 (the “Exchange Act”). These claims are

asserted against Carbo and certain of its officers (together with Carbo, the “Defendants”) who made

materially false and misleading statements and omissions during the Class Period.

2. Carbo is a manufacturing company that produces and supplies ceramic and resin-

coated sand proppants used in the hydraulic fracturing (“fracking”) of natural gas and oil wells in the

United States and internationally. Proppants are particles used in fracking to prop open fractures in

rock formations so that natural gas or oil may be extracted.

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3. Prior to the Class Period, rising natural gas prices led to increased gas drilling and

fracking activity in areas such as Haynesville where the demand for Carbo’s proppants was high. As

hydraulic fracturing continued to gain popularity in the United States, Carbo’s business flourished

and, from the first quarter of 2010 until prior to the start of the Class Period, the Company had

consistently sold out of its proppants.

4. Then, around mid-2011, the price of natural gas declined precipitously, while oil

prices increased. As a result, oil and gas exploration and production (“E&P”) companies moved

their drilling and fracking activities from dry natural gas wells to regions rich in oil and natural gas

liquids. By October 2011, the oil and gas industry had already begun drilling and fracking, or

preparing to frack, in various liquid rich basins located in North Dakota and Texas. Accordingly,

Carbo had to reallocate its proppants from dry gas shales, such as Haynesville, to liquid rich plays,

such as the Bakken, Eagle Ford and Permian.

5. On October 27, 2011, as E&P companies continued their migration to liquid rich

regions, Defendants made several statements regarding the high demand for Carbo’s product,

assuring investors that the industry’s migration from natural gas to liquid was a positive

development for the Company that would increase its market share and profits. Defendants also

stated that “proppant sales volumes [were expected] to remain healthy” for the fourth quarter. The

price of Carbo’s common stock responded positively to these statements, jumping from $123.62 per

share to $144.18 per share in one day, on heavy trading volume, with the price of Carbo options

correspondingly affected.

6. By the start of the Class Period, however, Defendants knew or recklessly disregarded

that the oil and gas industry’s migration toward liquid rich plays caused Carbo to experience

numerous logistical issues including railcar shortages, an inadequate distribution network and

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storage problems, all of which affected the Company’s ability to transport its proppants to the

liquidrich basins. Moreover, Carbo was also dealing with rail congestion, rail service failures and

transportation bottlenecks, which obstructed railcars carrying proppants and prevented them from

entering or leaving the liquid rich basins. Thus, even if Carbo was able to order sufficient railcars

and had built adequate distribution facilities, the Company could not overcome the fundamental

system failure of the railroads, upon which Carbo depended.

7. By the end of October 2011, when Defendants issued their positive statements,

including the statements outlined above, it was clear to Carbo’s senior management that the

Company’s logistical problems would affect its fourth quarter financials. At that time, Carbo was

one month into its fourth quarter and the industry shift to oil and natural gas liquids was already in

progress. Rather than disclose that Carbo was already experiencing logistical problems as a result of

the shift and did not have an adequate distribution network in these oil and gas liquid regions,

Defendants instead portrayed the market’s migration to liquids as a benefit to the Company. Even

when directly asked whether Carbo was having logistical issues, Defendant Kolstad responded,

“given our strong distribution, and the way we look forward, if things happen, we tend to catch cold,

while the rest of [our competitors] get pneumonia,” thereby implying that any logistical problems

experienced by Carbo would be minimal. Those false and misleading statements inflated the value

of Carbo’s stock (and correspondingly impacted Carbo options), which the market valued on the

basis of, among other things, Carbo’s ability to take advantage of the demand for proppants by being

able to deliver and sell the product to the liquid rich areas.

8. Only three months later, on January 26, 2012, Carbo revealed that its logistical

problems were far from minimal. On that date, the Company issued a press release announcing its

financial results for the fourth quarter and year ended 2011 and, for the first time in eight quarters,

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Carbo had failed to sell its proppants above capacity. After repeatedly downplaying any logistical

issues during the Class Period, Defendants shocked investors when they revealed that Carbo missed

earnings projections because the “the growth of activity in liquids-rich plays contributed to logistical

issues in the industry” and that the “logistical issues burdened [Carbo’s] distribution network.”

Defendants also admitted that Carbo was experiencing rail congestion that temporarily halted the

transport of their proppant to the liquid rich regions.

9. In response to the Company’s announcement, the price of Carbo common stock

plummeted $27 per share, from $131.03 to $104, with the price of Carbo Ceramics options

correspondingly affected.

JURISDICTION AND VENUE

10. The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) of the

Exchange Act [15 U.S.C. §§78j(b) and 78t(a)] and Rule 10b-5 promulgated thereunder by the SEC

[17 C.F.R. §240.10b-5].

11. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C.

§1331 and Section 27 of the Exchange Act [15 U.S.C. §78aa].

12. Venue is proper in this District pursuant to Section 27 of the Exchange Act and 28

U.S.C. §1391(b), as many of the acts and practices complained of herein occurred in substantial part

in this District. In addition, Carbo common stock is traded over the New York Stock Exchange

(“NYSE”), which is located in this District.

13. In connection with the acts alleged in this complaint, Defendants, directly or

indirectly, used the means and instrumentalities of interstate commerce, including, but not limited to,

the mails, interstate telephone communications and the facilities of the national securities markets.

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PARTIES

14. Lead Plaintiff Richard Goldman, as set forth in his certification previously filed with

the Court and incorporated by reference herein, purchased the common stock of Carbo during the

Class Period and has been damaged thereby.

15. Lead Plaintiff Michael Percoco, as set forth in his certification previously filed with

the Court and incorporated by reference herein, sold Carbo put options during the Class Period and

has been damaged thereby.

16. Defendant Carbo provides products and services to companies that perform hydraulic

fracturing of natural gas and oil wells in the United States and internationally. The Company

describes itself as “the world’s largest supplier of ceramic proppant.” As of April 27, 2012, Carbo

had over 23 million shares issued and outstanding that trade on the NYSE under the ticker symbol

“CRR.”

17. (a) Defendant Gary A. Kolstad (“Kolstad”) has served as Carbo’s President and

Chief Executive Officer since June 2006. Defendant Kolstad signed and certified Carbo’s quarterly

report on Form 10-Q for the period ended September 30, 2011 (“Q3 2011 10-Q”), which was filed

with the SEC on or about November 1, 2011.

(b) Defendant Ernesto Bautista (“Bautista”) has served as Carbo’s Vice President

and Chief Financial Officer since January 2009. Defendant Bautista signed and certified Carbo’s Q3

2011 10-Q, which was filed with the SEC on or about November 1, 2011.

(c) Defendants Kolstad and Bautista are collectively referred to herein as the

“Individual Defendants.”

18. Because of the Individual Defendants’ positions with the Company, they had access

to the adverse undisclosed information about the Company’s business, operations, operational

trends, financial statements, markets and present and future business prospects via access to internal

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corporate documents (including the Company’s operating plans, budgets and forecasts and reports of

actual operations compared thereto), conversations and connections with other corporate officers and

employees, attendance at management and Board of Directors meetings and committees thereof and

via reports and other information provided to them in connection therewith.

19. It is appropriate to treat the Individual Defendants as a group for pleading purposes

and to presume that the false, misleading and incomplete information conveyed in the Company’s

public filings, press releases and other publications as alleged herein are the collective actions of the

narrowly defined group of defendants identified above. Each of the above officers of Carbo, by

virtue of their high-level positions with the Company, directly participated in the management of the

Company, was directly involved in the day-to-day operations of the Company at the highest levels

and was privy to confidential proprietary information concerning the Company and its business,

operations, growth, financial statements, and financial condition, as alleged herein. Said Defendants

were involved in drafting, producing, reviewing and/or disseminating the false and misleading

statements and information alleged herein, were aware, or recklessly disregarded, that the false and

misleading statements were being issued regarding the Company, and approved or ratified these

statements, in violation of the federal securities laws.

20. As officers and controlling persons of a publicly-held company whose common stock

was, and is, registered with the SEC pursuant to the Exchange Act, and was, and is, traded on the

NYSE, and governed by the provisions of the federal securities laws, the Individual Defendants each

had a duty to disseminate prompt, accurate and truthful information with respect to the Company’s

financial condition and performance, growth, operations, financial statements, business, markets,

management, earnings and present and future business prospects, and to correct any previously-

issued statements that had become materially misleading or untrue, so that the market price of the

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Company’s publicly-traded common stock and options would be based upon truthful and accurate

information. The Individual Defendants’ misrepresentations and omissions during the Class Period

violated these specific requirements and obligations.

21. The Individual Defendants participated in the drafting, preparation, and/or approval

of the various public and shareholder and investor reports and other communications complained of

herein and were aware of, or recklessly disregarded, the misstatements contained therein and

omissions therefrom, and were aware of their materially false and misleading nature. Because of

their Board membership and/or executive and managerial positions with Carbo, each of the

Individual Defendants had access to the adverse undisclosed information about Carbo’s business

prospects and financial condition and performance as particularized herein and knew (or recklessly

disregarded) that these adverse facts rendered the positive representations made by or about Carbo

and its business, issued or adopted by the Company, were materially false and misleading.

22. The Individual Defendants, because of their positions of control and authority as

officers and/or directors of the Company, were able to and did control the content of the various SEC

filings, press releases and other public statements pertaining to the Company during the Class

Period. Each Individual Defendant was provided with copies of the documents alleged herein to be

misleading prior to or shortly after their issuance and/or had the ability and/or opportunity to prevent

their issuance or cause them to be corrected. Accordingly, each of the Individual Defendants is

responsible for the accuracy of the public reports and releases detailed herein and is, therefore,

primarily liable for the representations contained therein.

23. Each of the Defendants is liable as a participant in a fraudulent scheme and course of

business that operated as a fraud or deceit on purchasers of Carbo common stock and purchasers or

sellers of Carbo options contracts by disseminating materially false and misleading statements and/or

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concealing material adverse facts. The scheme: (i) deceived the investing public regarding Carbo’s

business, operations, management and the intrinsic value of Carbo common stock and options; and

(ii) caused Lead Plaintiffs and other members of the Class to suffer damages when the truth

eventually emerged.

CLASS ACTION ALLEGATIONS

24. Lead Plaintiffs bring this action as a class action pursuant to Federal Rule of Civil

Procedure 23(a) and (b)(3) on behalf of a class consisting of all those who purchased Carbo common

stock or Carbo call options, or sold Carbo put options during the Class Period and who were

damaged thereby (the “Class”). Excluded from the Class are Defendants, the officers and directors

of the Company, at all relevant times, members of their immediate families and their legal

representatives, heirs, successors or assigns and any entity in which Defendants have or had a

controlling interest.

25. The members of the Class are so numerous that joinder of all members is

impracticable. Throughout the Class Period, Carbo common shares were actively traded on the

NYSE. While the exact number of Class members is unknown to Lead Plaintiffs at this time and can

only be ascertained through appropriate discovery, Lead Plaintiffs believe that there are hundreds or

thousands of members in the proposed Class. Record owners and other members of the Class may

be identified from records maintained by Carbo or its transfer agent and may be notified of the

pendency of this action by mail, using the form of notice similar to that customarily used in

securities class actions.

26. Lead Plaintiffs’ claims are typical of the claims of the members of the Class as all

members of the Class are similarly affected by Defendants’ wrongful conduct in violation of federal

law that is complained of herein.

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27. Lead Plaintiffs will fairly and adequately protect the interests of the members of the

Class and have retained counsel competent and experienced in class and securities litigation.

28. Common questions of law and fact exist as to all members of the Class and

predominate over any questions solely affecting individual members of the Class. Among the

questions of law and fact common to the Class are:

(a) whether the federal securities laws were violated by Defendants’ acts as

alleged herein;

(b) whether statements made by Defendants to the investing public during the

Class Period misrepresented material facts about the business, operations and management of Carbo;

and

(c) to what extent the members of the Class have sustained damages and the

proper measure of damages.

29. A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the

damages suffered by individual Class members may be relatively small, the expense and burden of

individual litigation make it impossible for members of the Class to individually redress the wrongs

done to them. There will be no difficulty in the management of this action as a class action.

SUBSTANTIVE ALLEGATIONS

Background

30. Defendant Carbo manufactures and supplies ceramic and resin-coated sand

“proppants” primarily used in the hydraulic fracturing of natural gas and oil wells in the United

States and internationally. The Company also provides fracture simulation software and ancillary

services to oil and natural gas companies through its wholly – owned subsidiaries StrataGen, Inc.

and Applied Geometrics, Inc.

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31. Carbo primarily manufactures five types of ceramic proppants (CARBOHSP®,

CARBOPROP®, CARBOLITE®, CARBOECONOPROP® and CARBOHYDROPROP®). In

2010, the Company also began production of resin-coated ceramic and resin-coated sand proppants.

The Company has six production plants in New Iberia, Louisiana; Eufaula, Alabama; McIntyre,

Georgia; Toomsboro, Georgia; Luoyang, China; and Kopeysk, Russia.

32. The Company’s largest customers are petroleum pressure pumping companies, such

as Halliburton Energy Services, Inc. and Schlumberger Limited, who hydraulically fracture wells for

E&P companies. The Company recognizes revenue upon delivery of the proppants to the well site.

33. Carbo transports proppants from its production plants to distribution sites by rail. As

of February 2012, Carbo leased approximately 2,000 rail cars to distribute its proppants throughout

North America. The Company also maintains distribution facilities across North America where it

holds finished goods inventories of proppants. The distribution facilities have storage silos with

truck trailer loading facilities and rail yards for transloading the products from rail car to tank trucks.

Once the proppants are loaded onto the trucks, Carbo transports the proppants from the distribution

facilities to customers’ well sites.

The Process of Hydraulic Fracturing

34. Hydraulic fracturing is the process of pumping water or gel-based fluid down a

natural gas or oil well under high pressure to create fractures in the formation and increase the

recovery of hydrocarbons. A granular material, called proppant, is transported in the fluid and fills

the fracture, “propping” it open in order to allow hydrocarbons to flow from the formation to the

well and up to the surface.

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-

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35. There are three main types of proppant that can be utilized in the hydraulic fracturing

process:

Sand – Sand is the least expensive proppant. It is also the most common proppant and accounts for the vast majority of volumes consumed.

Resin coated sand – Resin coated sand is conventional sand that has been coated in a resin to add strength and create uniformity of size. Resin coated sand proppant is more durable than conventional sand and better at resisting high pressure. It is also more expensive than conventional sand.

Ceramics – Ceramic proppants are the most expensive proppants and the second most common proppant by volume. Ceramic proppants are man-made and primarily used in deep wells. They are more crush resistant than sand or resin coated sand and are designed to hold the fractures created in higher pressure environment wells open longer.

Prior to the Class Period, Demand for Carbo’s Proppants for Dry Natural Gas Shales was High

36. Demand for Carbo’s proppants depends primarily on the demand for natural gas and

oil and on the number of natural gas and oil wells drilled for hydraulic fracturing. Accordingly, as

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hydraulic fracturing became popular in the United States, Carbo’s business grew quickly and the

Company’s revenue only grew as more wells were drilled.

37. Until early 2011, natural gas drilling activity dominated over oil drilling in the United

States. The growing interest in natural gas as a cheaper and cleaner fuel source created a large

increase in hydraulic fracturing for natural gas.

38. Rising natural gas prices led to increased gas drilling activity in regions such as

Haynesville. The Haynesville shale was the biggest dry gas play and the region in which Carbo sold

a large amount of its proppant. In 2010, for example, approximately 20-30% of the Company’s total

proppant was sold in Haynesville.

39. As drilling and fracking activities in these dry gas shales increased, Carbo

experienced a surge in demand for its proppants. Indeed, from the beginning of 2010 until prior to

the start of the Class Period, Carbo had been consistently “sold out” of its ceramic proppants. As a

result, Carbo increased production to meet demand.

40. Through 2010, Carbo’s “nameplate” manufacturing capacity for ceramic proppants

was approximately 300 million pounds per quarter. As demonstrated in the graph below, from the

first quarter of 2010 through the first quarter of 2011, the Company consistently sold volumes of

proppant above the stated manufacturing capacity. Even as Carbo’s manufacturing capacity

increased to 375 million pounds in the first quarter of 2011, the Company was able to sell beyond its

capacity. Carbo continued to sell above manufacturing capacity in the second and third quarters of

2011.

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CRRS Ss Vokirns (million Ibs)

400

350

(

300

250

,fln

3009 4QD9 iQiO 2010 301D 4010 1011

Sc1Jrc: Ccinpiythta, Morgi Slanley Re5erE11

Migration to Liquid-Rich Plays

41. Historically, oil and natural gas prices have moved hand in hand. However, since

October 2011, while oil prices climbed to near record peaks, natural gas prices fell to levels not seen

since the mid-1970s.

$120

$ilo

$100

$90

$80

Crude Oil Spot WTI Cushing

$70 0210112011 04(01(2011 06(02(2011 0810212011 0913012011 1113012011 0210112012

0310312011 0510312011 0710112011 0813112011 10/31/2011 12130/2011 Feb 1, 2011 - Feb 9, 2012 WIRG Eono,ir 21112

www.wtrg.com (479) 2934001

Close

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$5.00

$4.50

$4.00

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$3.00

$2.50

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Natural Gas Spot Henry Hub

2. 195

"62/011201 1 0410112011 0610212011 0810212011 0913012011 1113012011 0210112012 0310312011 0510312011 0710112011 0813112011 1013112011 1213012011

Feb 1, 2011 - Feb 9, 2012 MF - .....

www.wtrtj.com

Close (479) 293-4081

42. The decline in natural gas prices was primarily attributable to oversupply. As the

growing supply of natural gas grew faster than demand, natural gas prices experienced a significant

decline. By mid-2011, the price of natural gas reached record lows. With natural gas prices

dropping to under $3.50 mmbtu, E&P companies were forced to cut back on activity in gas driven

plays such as Haynesville, where Carbo had high exposure. Oil, on the other hand, was trading at

around $100 per barrel, a significant premium to natural gas. As a result, many operators shifted

their exploration and development focus from dry gas shales to resource plays with a greater

propensity for liquids production, such as oil and natural gas liquids that command higher prices

than dry gas. These liquid rich plays included the Bakken in North Dakota, Montana and Alberta,

Canada and Texas shale fields such as Eagle Ford and the Permian.

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Weekly Shares of U.S. Drilling Rigs:

70%- Natural Gas vs. Oil 2010 tO 2012

66% 65%

60% -

55%

50% -

45% -

40% -

35% -

2010

2011 2012

43. By early 2011, E&P companies announced implementing changes in expenditures

away from natural gas and toward oil. E&P companies soon began sending rigs to liquid rich

plays – primarily the Bakken and Eagle Ford.

44. As a result, Carbo experienced a reduction in sales volumes of proppants in natural

gas fields, including certain shale plays. Haynesville, one of the most profitable shale plays for

Carbo, was especially hit hard. As the demand for natural gas and its price dropped, Carbo’s

customers in the Haynesville shale field began to shut down their drilling operations. With the vast

majority of E&Ps pulling out of Haynesville due to the decline in natural gas prices, demand for

Carbo’s proppants subsided and the Company was forced to transition to liquid rich basins. The

transition, however, presented a series of logistical challenges for the Company.

Carbo Experiences Problems Getting Its Proppants to Liquid Rich Basins Due to Its Weak Distribution Network and Dependence on Railroad Companies

45. By the start of the Class Period, investors were led to believe that Carbo was well

positioned to handle the migration from natural gas to liquid plays and would actually benefit from

the transition. Indeed, during the third quarter, Defendants implied that Carbo had already started to

benefit from the migration and attributed the Company’s “exceptional third quarter results” to the

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“importance that our clients place on high conductivity proppant, especially in the North American

liquids-rich resource plays such as the Bakken, Colony Granite Wash, Eagle Ford, and Permian.”

46. Defendants told investors that, as E&P companies moved to liquid rich basins,

Carbo’s proppant sales volume would continue “to remain healthy” in the fourth quarter and that, in

fact, growth in demand for the Company’s proppants was only “amplified by the large liquids-rich

resource plays, such as the Bakken, the Eagle Ford, the Permian, the Granite Wash.”

47. During the Class Period, however, Carbo was experiencing significant logistical

issues that prevented the Company from transporting some of its proppant to the oil and liquid plays

and, accordingly, constrained sales.

48. For Carbo, the shift to liquid plays meant that the Company had to reposition and

reconfigure its distribution infrastructure in order to re-allocate its proppant from Haynesville to

liquid rich basins. Although Defendants had already started relocating sales to other plays such as

the Bakken, Eagle Ford and the Permian during the third quarter of 2011, Carbo was beginning to

come across numerous problems that would hinder their ability to successfully transport their

proppant to these regions.

49. One of the problems that the Company was facing was difficulty obtaining the

amount of railcars necessary to transport its proppants. During the Class Period, there was a

shortage in railcar supply for proppants. As Carbo attempted to migrate to the liquid rich plays

along with the rest of the industry, they soon discovered that railcars were not readily available and

there was a 10-12 month order backlog. According to data from the Railway Supply Institute, railcar

orders more than doubled to 20,165 in the third quarter of 2011 from a year earlier and the order

backlog for freight cars more than tripled in the same period to over 65,000.

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50. Approximately 15-30 or more rail cars of proppant are needed for fracking just one

well. While Carbo leased no more than 2,000 railcars during the Class Period, the Company was

still short several hundred railcars, which affected their ability to transport proppants to their

customers at the liquid rich plays. As a result, by the start of the Class Period, Defendants knew that

Carbo’s railcar fleet was inadequate to serve the liquid rich areas and that the Company would not be

able to obtain additional railcars.

51. Carbo also did not have an adequate distribution network in place once the railcars

reached the distribution facilities. As a result, the Company did not have enough storage capacity

for its proppants at its stock locations in the liquid rich regions and was forced to use railcars for

storage, what is sometimes referred to as a “horizontal silo.” Using a railcar for this purpose can

easily double the cycle time and cut the fleet utilization in half.

52. However, even if Carbo was able to overcome the railcar shortages and inadequate

distribution facilities, the Company was still dependent upon the railroad companies they contracted

with. Specifically, during the Class Period, railroad companies experienced a slowdown in transit

times due to high congestion in the North Dakota and Texas oil fields. While the rail infrastructure

was well developed in Haynesville, there was much less railway capacity in North Dakota, South

Texas and West Texas, where the liquid rich plays were located. The limited railway capacity,

coupled with the mass migration to liquid-rich regions, caused rail traffic, system-wide breakdowns

and service failures.

53. For example, Union Pacific Railroad was experiencing multiple significant service

failures on movements of proppants into the Permian/Eagle Ford area during the Class Period.

These service failures caused an accumulation of rail cars at destination points and presented

difficulties cycling cars out of the region for repositioning of new shipments of proppant. Shipments

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of proppant and sand into the Bakken region were impeded by similar service failures and rail

congestion. As a result, the rail companies that Carbo contracted with instituted embargoes that

suspended the movement of Carbo’s proppant to the liquid rich regions.

54. Defendants knew, or recklessly disregarded, that these problems would have a

negative effect on Carbo’s proppant sales volume and earnings in the fourth quarter. Moreover,

Defendants knew, or recklessly disregarded, that Carbo, despite its assurances to the contrary, was

not immune to railroad issues because the railroad companies were not under the Company’s control

or direction.

MATERIALLY FALSE AND MISLEADING STATEMENTS MADE DURING THE CLASS PERIOD

55. The Class Period begins on October 27, 2011. On that date, Carbo issued a press

release announcing its financial results for the third quarter of 2011, the period ended September 30,

2011. For the quarter, the Company reported net income of $36.9 million, or $1.59 per share, on

revenues of $167.1 million. Defendant Kolstad commented on the announcement, stating, in

pertinent part, as follows:

We are pleased that CARBO set a number of financial and operational records during the quarter. The exceptional third quarter results continued to highlight the importance that our clients place on high conductivity proppant, especially in the North American liquids-rich resource plays such as the Bakken, Colony Granite Wash, Eagle Ford, and Permian.

The demand by E&P operators for our high quality, high conductivity ceramic proppant continues to grow , as evidenced by the company’s record ceramic proppant sales volume for the quarter. The benefit E&P operators see, as measured by increased production and higher estimated ultimate recovery (EURs), continues to enhance their economic returns. We continue to work with our clients to optimize their fracs and maximize their profit through Economic Conductivity® analysis.

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Regarding our commitment to capacity growth, we were excited to commence production ahead of schedule at the company’s newest 250 million lb. production line at our Toomsboro, Georgia plant. 1

With respect to the Company’s outlook, Defendant Kolstad stated, in pertinent part, as follows:

We exited the third quarter with positive momentum. As a result, we expect proppant sales volumes to remain healthy , tempered by typical fourth quarter seasonality. Although broader economic issues remain fluid and commodity prices continue to fluctuate, we remain optimistic with respect to proppant demand in 2012. Noteworthy is the continued migration of North American upstream investment towards liquids-rich resource plays, where multi-phase flow reservoir conditions benefit the most from CARBO’s high conductivity ceramic proppant .

56. The statements referenced above in ¶55 were materially false and misleading when

made because, at the time they were made, Defendants knew (or were reckless in not knowing) that

Carbo was experiencing logistical problems – including a shortage of railcars, rail congestion and

inadequate distribution facilities – which hindered the Company’s ability to transport its proppant to

the liquid rich resources plays. Accordingly, Defendants’ statements regarding growing demand for

Carbo’s proppants and the benefit of “CARBO’s high conductivity ceramic proppant” in areas such

as the Bakken, Eagle Ford, Granite Wash and the Permian were misleading because Carbo was

unable to meet the demand because they were having difficulties delivering the proppants to

customers in oil and liquid rich basins where drilling activity was accelerating, which would have a

negative affect on the Company’s fourth quarter proppant sales volume and earnings.

57. Following the issuance of the press release, on October 27, 2011, Carbo held a

conference call with analysts and investors to discuss its earnings and operations (the “October 27 th

Conference Call”). During the conference call, Defendants made numerous positive statements

about the Company, its business, operations and earnings prospects. Defendant Kolstad also spoke

Unless otherwise noted, all emphasis is added.

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positively about the migration to liquid rich plays for Carbo’s business and implied that investors

should expect continued growth, stating, in pertinent part, as follows:

Before I move on to discuss our growth in resin-coated sand, I would like to briefly discuss the topic of increasing proppant demand and competition. We have always faced competition, whether from ceramic, resin-coated sand, or sand itself. We have said repeatedly over the years that competition would increase, and thus have based our business strategy under this assumption. Demand for proppant continues to grow, further amplified by the large liquids-rich resource plays, such as the Bakken, the Eagle Ford, the Permian, the Granite Wash, which continue to see rising rig counts largely focused on horizontal drilling. The trend towards horizontal drilling continues to increase the amount of proppant consumed, in these long laterals, and have a higher number of Frac stages. As I mentioned before, a horizontal well typically consumes 10 times that of a vertical well in proppant.

So what does this all mean to the competitive landscape of the proppant market? For every 200 million pounds of additional manufacturing-capacity coming on-line, this will satisfy, roughly, 100 wells per year or 8 wells per month. Let’s look at that. In 2011, in the US, we will drill 52,000 wells. And that is up 40% from last year, when we drilled 37,000 wells. More importantly, to us, and our high conductivity proppant, is the fact that the oil wells being drilled, have increased from 18,500 last year, to where they will probably be around 32,500 this year, or an increase of 75%.

The analysts, of course, expect that continued migration to these liquids-rich plays, as we move into 2012 and the future. Not only are we seeing the rig counts increase in these liquids-rich plays, but we are also seeing drilling efficiencies increase the number of wells drilled per rig. The E&P operators clearly understand they need more conductivity in the liquids-rich plays, where multi-phase flow reservoir conditions benefit the most from CARBO’s high conductivity proppant. And that would include both our Tier 1 ceramic proppant, and the Tier 2 resin-coated sand proppants .

Distinguishing Carbo from its Chinese competitors, Defendant Kolstad also stated, in pertinent part,

as follows:

Chinese imports have increased as demand has increased, too. If you remember what I told you in 2008, that during down cycles, Chinese imports would fall faster than the market, which is what happened in 2009. As CARBO brings on additional capacity, we can expect to continue to displace these imports, due to a number of reasons; Our clients trust CARBO quality and our commitment to deliver what we say we will . Chinese quality, on the other hand, is variable. There are increasing costs in manufacturing, in particular energy and raw materials, in China. We know this, because we have a plant that manufactures there. The transportation costs are increasing. Foreign-exchange costs, logistical issues, and then, the business model.

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Clients often have to buy the proppant in China, and put it into the inventory, versus, with CARBO, you make 1 phone call and we deliver it to the well site .

58. The statements referenced above in ¶57 were materially false and misleading when

made for the reasons stated in ¶56. In addition, the statements in ¶57 distinguishing Carbo from its

competitors were misleading because they implied that Carbo was able to successfully and quickly

deliver proppants to its customers when, in fact, the Company was experiencing severe logistical

problems that hindered their ability to transport proppants to liquid rich plays.

59. During the October 27 th Conference Call, Defendant Kolstad mentioned “logistical

issues” facing the oil and gas industry as a whole, but downplayed the impact on Carbo. The

following exchange took place:

JOHN DANIEL: Industry, having logistical issues – you said that earlier in the conference call. Was that a reference to include you guys, or does that apply just to the competition?

GARY KOLSTAD: Well, given our strong distribution, and the way we look forward, if things happen, we tend to catch cold, while the rest of them get pneumonia . But the big shift – there has been quite a shift out of the Haynesville, going to the other places, and there is an increasing demand for our product and we assume others . We know the questions that E&P ask us, and service companies ask us. So we have a pretty broad audience that we get to listen to, and that is why I made that statement.

JOHN DANIEL: I’m just wondering if the logistical issues facing some of the others might be 1 reason that the seasonal impact and your ability to deliver product, maybe that seasonal impact in Q4 is not as great.

GARY KOLSTAD: No, we will always have seasonal impacts, and then this thing has gotten so big, and the involvement of railroads, and involvement of trucking, and the involvement of weather. I get a big kick out of – this year, everybody said, we had weather problems in the Bakken; and we said, well, we have got news for you, you’re going to have weather problems in the Bakken every year. It is where we are moving the drilling rigs now, that will pose more of a logistical problem in the North.

60. The statements referenced above in ¶59 that Carbo had a “strong distribution”

network and were immune from the logistical issues that “the rest” of the industry was experiencing

were materially false and misleading because at the time they were made, Defendants knew that the

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Company was already experiencing logistical problems as a result of the shift to oil and liquid

plays.2 Rather than disclose these logistical problems, which were already occurring, Defendants

misleadingly implied that the “shift out of the Haynesville” provided Carbo with an opportunity for

increased revenue and market share. While emphasizing “increasing demand” for Carbo’s products

in areas such as the Bakken, Eagle Ford, Granite Wash and Permian, Defendant Kolstad failed to

disclose that the Company did not have adequate distribution networks in these areas and would not

be able to transport its proppant to these regions because Carbo could not overcome the problems at

the railroads, which Carbo depended upon. Accordingly, Defendants’ statements regarding large

scale increases in the Company’s production capacity and increased market demand for Carbo’s

proppants were misleading because the Company was experiencing problems delivering the product

to their customers.

61. Defendant Kolstad ended the October 27 th Conference Call by representing that

demand for the Company’s products was strong, stating, in pertinent part, as follows:

Thanks everybody, for joining us this morning. It was a great quarter for us. Line 4 is starting up. We are going to continue to try and meet the additional demand for our high quality, high conductivity ceramic proppants in these incredible liquids-rich plays . We are going to continue to work on further capacity additions, with the 300 million pounds of resin-coating at New Iberia 2, online at the end of the fourth quarter; additional 600 million pounds of resin-coated sand capacity before the end of 2012, in Marshfield, Wisconsin; and up to 500 million pounds of ceramic in Milan, Georgia, before the end of 2013.

For the fourth quarter, as we mentioned, we expect proppant sales volumes to remain healthy , tempered by typical fourth-quarter seasonality. Our strategy remains steadfast. We will continue to expand our Company in a competitive marketplace and, doing so, will continue to grow capacity of high quality, high

2 Prior to the Class Period, on September 7, 2011, at the Barclays CEO Energy Power Conference, Defendant Kolstad similarly touted Carbo’s distribution network by describing it as a “Coca-Cola like distribution system that’s pretty hard to break.”

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conductivity proppant, leverage and expand our distribution model, and deliver upon the promises we made to our clients .

62. The statements referenced above in ¶61 were materially false and misleading when

made for the reasons stated in ¶56.

63. In response to the positive earnings announcement and conference call, the price of

Carbo stock surged, rising from $123.62 per share to $144.18 per share on heavy trading volume,

with the price of Carbo options correspondingly affected.

64. Relying on Defendants’ materially false and misleading statements, analysts reacted

positively towards the current and future prospects of Carbo and the effect of the industry’s

migration to liquid rich plays on the Company’s business. For example, on October 28, 2011, an

analyst with Capital One Southcoast Inc. highlighted Carbo’s “[v]ery very very positive conf call,”

stating, in pertinent part, as follows:

Mgt was as bullish as we’ve ever heard them, and demand picture was painted very well for people who don’t think of proppant on a well-count basis. Demand still very strong for the entire proppant mkt, and we feel it’s worth reiterating that ceramics aren’t just a Bakken product – a very common misconception. . . . While growth seems predictable, 3Q is evidence that there can still be upside to numbers. Would look for Street ests to trend higher w/ ours staying flattish. Still confident that CRR can push up even more even w/ the 25% move this wk. CRR still one of our top ideas, and it’ll remain on our Focus List.

On the same day, an analyst at Morgan Keegan & Company, reported expectations for Carbo to

achieve $1.66 in earnings per share and to sell 460 million lbs of proppant for the fourth quarter,

stating, in pertinent part:

Q3:11 benefited from higher proppant volumes sold due to higher third party proppant sales, proppant sales out of inventory, and even a few million lbs from early start-up of Toomsboro Line (“T4”). We have slightly raised our volume expectations for 2012 based on recent performance and the likelihood that a similar degree of third party proppant sales will continue (~25mm lbs/quarter).

65. On or about November 1, 2011, Carbo filed with the SEC the Company’s Form 10-Q

for the third quarter of 2011, the period ended September 30, 2011 (“3Q11 Form 10-Q”). The 3Q11

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Form 10-Q, which was signed by Defendants Kolstad and Bautista, discussed the Company’s

expected future performance, stating, in pertinent part, as follows:

The Company believes its operating results for the remainder of the year will continue to be influenced by the level of oil and natural gas drilling in North America. While natural gas prices remain low, the continuing shift in oilfield activity by the Company’s clients to oily, liquids-rich plays will likely keep industry activity at high levels for the remainder of the year. Accordingly, the Company believes near-term proppant sales volumes will remain healthy, tempered by typical fourth quarter seasonality. The Company expects to support demand increases with additions to its production capacity. The recently completed fourth production line at its Toomsboro, Georgia facility increases ceramic proppant production capacity by 250 million pounds annually and brings the Company’s total ceramic proppant capacity to 1.75 billion pounds per year. With respect to resin coating capacity expansion, the second production line in New Iberia, Louisiana remains on schedule for the completion near the end of the fourth quarter of 2011. Once completed, this line will increase the Company’s annual resin coating capacity to 350 million pounds. A 600 million pound per year resin coating facility under construction in Marshfield, Wisconsin is on schedule for completion before the end of 2012. Additionally, the Company has completed the due diligence process for a new ceramic proppant manufacturing site and has moved forward with the purchase of a site in Georgia. This plant is targeted with initial production capacity of up to 500 million pounds annually and could commence production before the end of 2013. During periods of high demand, and at the request of its customers, the Company may also continue to engage in the sale of ceramic proppant that meets API/ISO standards manufactured on an outsourced basis, and during the nine months ended September 30, 2011 the majority of the increase in finished goods inventory is attributable to this type of proppant.

66. The statements referenced above in ¶65 were materially false and misleading when

made for the reasons stated in ¶56.

THE TRUTH IS REVEALED

67. On January 26, 2012, Carbo issued a press release announcing its financial results for

the fourth quarter of 2011 and fiscal year 2011, the periods ending December 31, 2011. For the first

time in eight quarters, Carbo had failed to sell its proppant above capacity. For the quarter, the

Company sold 387 million pounds of proppant (339 million pounds of which were ceramic

proppant) and reported net income of $33.1 million, or $1.43 per share on revenues of $158.1

million. This compares to $179.2 million in revenue and $1.70 in earnings per share analysts

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expected Carbo to earn in the fourth quarter. Defendant Kolstad commented on the results, stating,

in pertinent part, as follows:

For the fourth quarter 2011, proppant volumes increased 16 percent, revenues increased 32 percent and net income increased 59 percent when compared to the fourth quarter 2010. Notwithstanding this solid performance, the fourth quarter had its challenges beyond typical seasonality.

The severe decline in natural gas prices during the quarter led E&Ps to reduce capital spending in natural gas basins and increase capital spending in liquids-rich basins. The largest impact associated with this shift in capital spending was a reduction of approximately 70 percent in our Haynesville proppant sales volumes from the third quarter of 2011, which was partially offset by growth in the liquids-rich plays and international markets.

The growth of activity in liquids-rich plays contributed to logistical issues in the industry. These logistical issues burdened our distribution network. From our perspective, the industry’s response to the decline of activity in the Haynesville, reallocation of proppant supply and demand and adjustment to natural gas fundamentals will take some time to work out. During the fourth quarter 2011, we accelerated several distribution infrastructure investments to address the logistical challenges we faced.

68. Following the issuance of the press release, Carbo held a conference call with

analysts and investors to discuss its earnings and operations. During the conference call, Defendants

admitted that the Company had seen a 70% decline in proppant sales in the Haynesville region and

that it had experienced problems transporting its proppant to various liquid plays due to logistical

issues, including rail congestion, lack of storage capacity and problems transloading proppant.

When an analyst asked when the logistical problems “started to creep in,” Defendant Kolstad

admitted that Carbo was experiencing logistical problems during the fourth quarter of 2011.

However, in contrast to his prior statements that the Company would not be affected by logistical

problems plaguing the industry, Defendant Kolstad now claimed that he warned investors in the third

quarter conference call by stating that he “started mentioning logistics at that point.”

69. During the January 26, 2012 conference call, Defendant Kolstad also admitted that

Carbo did not have an adequate distribution network in the liquid-rich regions and was experiencing

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problems with storage and “transloading [] proppant at the geographical sites.” As a result, Carbo

was forced to “accelerate[] several distribution infrastructure investments to address the logistical

challenges [the Company] faced . . . include[ing] rail car additions, as well as increasing [its] storage

capacity in the key unconventional plays [the Company] serve[s].” Defendant Kolstad also admitted

that, during the fourth quarter, Carbo was experiencing rail congestion that temporarily halted the

transport of its proppant to the liquid rich plays and that the Company was just like its competitors –

dependent upon the railroad companies. In that regard, Defendant Kolstad, in response to a question

regarding the Company’s logistical problems in the fourth quarter, stated, in pertinent part, as

follows:

JEFF TILLERY, ANALYST, TUDOR, PICKERING, HOLT & CO. SECURITIES: Could you give us a little bit of color on just the timing of when some of the logistical bottlenecks started to creep in. The reason I ask is, is it December weighted and maybe the Q1 impact is a little bit worse or was it more just ratably felt through the course of the fourth quarter?

GARY KOLSTAD: Well as I spoke in the Q3 conference call, I started mentioning logistics at that point, and then later on of course at the conference I mentioned it. And so it got worse as you headed into the fourth quarter, and I think when I make a statement about relative to fourth quarter, we’re more optimistic on Q1. A lot of that has to do with logistics, so we’ve taken some of our steps, as I mentioned, added the rail cars. We have done some other steps in the secondary solution, and we’re getting ready to invest in the third solution. So, yes, I don’t know. The railroad gets to do things at their will, and I certainly now understand what the word embargo means, and I think the industry does, too, better now. So we aren’t alone in this, and we get to work at their discretion, lets say.

70. In response to the Company’s announcements, the price of Carbo common stock

declined from $131.03 per share to $104 per share on heavy trading volume, with the price of Carbo

options correspondingly affected. The stock continued to decline over the next several days and, on

January 31, 2012, closed at $97.25 per share. Today, Carbo trades at approximately $67 per share.

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71. Analysts were shocked by Carbo’s fourth quarter earnings miss and its disclosure of

distribution problems. In a report dated February 8, 2012, analysts at the Buckingham Research

Group wrote, in pertinent part, as follows:

Ceramic Distribution Problems Are Probably Bigger Than CRR Is Willing to Admit

Historically, CRR has been the king of proppant distribution and logistics (mainly rail-car and use of railroads) keeping its customers happy with just-in time product and giving it a material competitive advantage versus competitors. Hence, CRR’s revelations on its 4Q11 conference call that it would take time to bring new distribution facilities on line in remote new oil and liquids rich shale plays and work out future delivery arrangements with the railroads should be a shocker to investors, it certainly was to us. Our feeling is that something just isn’t right here.

72. Carbo’s logistical problems were so severe that they continued into the first quarter of

2012. As Defendant Kolstad admitted during a conference call with analysts and investors held on

April 26, 2012, “it’s going to take a little while to get those things worked out, railcars, storage, et

cetera. We know that’s going to impact us some.”

LOSS CAUSATION

73. The market for Carbo common stock was open, well-developed and efficient at all

relevant times. As a result of these materially false and misleading statements and failures to

disclose, Carbo common stock traded at artificially inflated prices during the Class Period, which

correspondingly affected the price of Carbo options contracts. Lead Plaintiffs and other members of

the Class purchased or otherwise acquired Carbo common stock, or purchased or sold Carbo options

contracts, relying upon the integrity of the market price of Carbo common stock and market

information relating to Carbo, and have been damaged thereby.

74. During the Class Period, Defendants materially misled the investing public, thereby

inflating the price of Carbo common stock, and correspondingly affecting the price of Carbo options,

by publicly issuing false and misleading statements and omitting to disclose material facts necessary

to make Defendants’ statements, as set forth herein, not false and misleading. Said statements and

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omissions were materially false and misleading in that they failed to disclose material adverse

information and misrepresented the truth about the Company, its business and operations, as alleged

herein. On the strength of these false statements, the Company’s stock price was artificially inflated

to a Class Period high of $162.36 per share on November 16, 2011, and the price of Carbo Ceramics

options was correspondingly affected.

75. At all relevant times, the material misrepresentations and omissions particularized in

this Complaint directly or proximately caused or were a substantial contributing cause of the

damages sustained by Lead Plaintiffs and other members of the Class. As described herein, during

the Class Period, Defendants made or caused to be made a series of materially false or misleading

statements about Carbo’s business, prospects and operations. These material misstatements and

omissions had the cause and effect of creating in the market an unrealistically positive assessment of

Carbo and its business, prospects and operations, thus causing Carbo common stock to be

overvalued and artificially inflated at all relevant times, which correspondingly affected the price of

Carbo options. Defendants’ materially false and misleading statements during the Class Period

resulted in Lead Plaintiffs and other members of the Class to purchase Carbo common stock at

artificially inflated prices, or purchase or sell Carbo options at correspondingly impacted prices, thus

causing the damages complained of herein.

Additional Scienter Allegations

76. As alleged herein, Defendants acted with scienter in that Defendants knew or were

reckless in not knowing that the public documents and statements issued or disseminated in the name

of the Company were materially false and misleading; knew that such statements or documents

would be issued or disseminated to the investing public; and knowingly and substantially

participated or acquiesced in the issuance or dissemination of such statements or documents as

primary violations of the federal securities laws. As set forth elsewhere herein in detail, Defendants,

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by virtue of their receipt of information reflecting the true facts regarding Carbo, their control over,

and/or receipt and/or modification of Carbo’s allegedly materially misleading misstatements and/or

their associations with the Company which made them privy to confidential proprietary information

concerning Carbo, participated in the fraudulent scheme alleged herein.

77. Defendants knew, or recklessly disregarded, that, during the Class Period, Carbo was

experiencing severe logistical problems – including railcar shortages, an inadequate distribution

network and storage problems – which affected the Company’s ability to transport its proppants to

the liquid-rich basins and had a negative effect on Carbo’s proppant sales volume and earnings in the

fourth quarter.

78. Defendants also knew, or recklessly disregarded, that the railroad companies that

Carbo used to transport their proppants to liquid rich basins were experiencing rail congestion,

service failures and transportation bottlenecks, which caused the railroad companies to institute

embargoes. Nevertheless, Defendants issued numerous statements touting the high demand for

Carbo’s proppants and assured investors that the industry’s shift to liquid rich basins was a positive

development for the Company.

79. During the Class Period, Defendants downplayed the effects of logistical issues on the

Company’s business, stating, “given our strong distribution, and the way we look forward, if things

happen, we tend to catch cold, while the rest of [our competitors] get pneumonia.” At the time

Defendants made these statements, Defendants knew that the Company had a shortage in railcars and

lacked storage capacity. Moreover, with regard to railroad company embargoes, Defendants were

well aware that the embargoes were occurring during the fourth quarter, as evidenced by Defendant

Kolstad’s admission on January 26, 2012 that “[t]he railroad gets to do things at their will, and I

certainly now understand what the word embargo means . . . .”

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Applicability of Presumption of Reliance: Fraud on the Market Doctrine

80. At all relevant times, the market for Carbo common stock and options was an

efficient market for the following reasons, among others:

(a) Carbo stock met the requirements for listing, and was listed and actively

traded on the NYSE, a highly efficient and automated market;

(b) as a regulated issuer, Carbo filed periodic public reports with the SEC and the

NYSE;

(c) Carbo regularly communicated with public investors via established market

communication mechanisms, including through regular disseminations of press releases on the

national circuits of major newswire services and through other wide-ranging public disclosures, such

as communications with the financial press and other similar reporting services; and

(d) Carbo was followed by several securities analysts employed by major

brokerage firms who wrote reports, which were distributed to the sales force and certain customers

of their respective brokerage firms. Each of these reports was publicly available and entered the

public marketplace.

81. As a result of the foregoing, the market for Carbo common stock and options

contracts promptly digested current information regarding Carbo from all publicly available sources

and reflected such information in the security’s price. Under these circumstances, all Carbo stock

and options investors during the Class Period suffered similar injuries through their purchases (and

in the case of put sellers, their sales) at prices which were artificially inflated by the Defendants’

misrepresentations and omissions. Thus, a presumption of reliance applies.

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NO SAFE HARBOR

82. The statutory safe harbor provided for forward-looking statements under certain

circumstances does not apply to any of the allegedly false statements pleaded in this complaint.

Many of the specific statements pleaded herein were not identified as “forward-looking statements”

when made. To the extent there were any forward-looking statements, there were no meaningful

cautionary statements identifying important factors that could cause actual results to differ materially

from those in the purportedly forward-looking statements. Alternatively, to the extent that the

statutory safe harbor does apply to any forward-looking statements pleaded herein, Defendants are

liable for those false forward-looking statements because at the time each of those forward-looking

statements was made, the particular speaker knew that the particular forward-looking statement was

false, and/or the forward-looking statement was authorized and/or approved by an executive officer

of Carbo who knew that those statements were false when made.

COUNT I

Violation of Section 10(b) of the Exchange Act Against and Rule 10b-5

Promulgated Thereunder Against All Defendants

83. Lead Plaintiffs repeat and re-allege each allegation above as if fully set forth herein.

84. This claim is brought under Section 10(b) of the Exchange Act, 15 U.S.C. §78j(b) and

Rule 10b-5 promulgated thereunder by the SEC, 17 C.F.R. §240.10b-5, against Carbo and the

Individual Defendants. Defendants (1) employed devices, schemes and artifices to defraud; (2)

made untrue statements of material fact and/or omitted material facts necessary to make the

statements made not misleading; and (3) engaged in acts, practices and a course of business which

operated as a fraud and deceit upon Lead Plaintiffs and the Class, in violation of Section 10(b) of the

Exchange Act and Rule 10b-5 promulgated thereunder.

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85. Defendants, individually and in concert, directly and indirectly, by the use, means or

instrumentalities of interstate commerce and/or the mails, engaged and participated in a continuous

course of conduct to conceal non-public, adverse material information about the Company’s

financial condition as reflected in the misrepresentations and omissions set forth above.

86. Defendants each had actual knowledge of the misrepresentations and omissions of

material facts set forth herein, or acted with reckless disregard for the truth by failing to ascertain

and to disclose such facts even though such facts were available to them, or deliberately refrained

from taking steps necessary to discover whether the material facts were false or misleading.

87. As a result of Defendants’ dissemination of materially false and misleading

information and their failure to disclose material facts, Lead Plaintiffs and the Class were misled into

believing that the Company’s financial statements and other disclosures were true, accurate, and

complete.

88. Lead Plaintiffs and the Class either purchased common stock or transacted in Carbo

options contracts, without knowing that Defendants had misstated or omitted material facts about the

Company’s financial performance or prospects. In so doing, Lead Plaintiffs and the Class relied

directly or indirectly on false and misleading statements made by Defendants, and/or an absence of

material adverse information that was known to Defendants or recklessly disregarded by them but

not disclosed in Defendants’ public statements. Lead Plaintiffs and the Class were damaged as a

result of their reliance on Defendants’ false statements and misrepresentations and omissions of

material facts.

89. At the time of Defendants’ false statements, misrepresentations and omissions, Lead

Plaintiffs and the Class were unaware of their falsity and believed them to be true. Lead Plaintiffs

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and the Class would not otherwise have purchased Carbo common stock or transacted in Carbo

options contracts had they known the truth about the matters discussed above.

90. Lead Plaintiffs are filing this action within two years after discovery of the facts

constituting the violation, including facts establishing scienter and other elements of Lead Plaintiffs’

claim, and within five years after the violations with respect to Lead Plaintiffs’ investments.

91. By virtue of the foregoing, Defendants have violated §10(b) of the Exchange Act and

Rule 10b-5 promulgated thereunder.

92. As a direct and proximate result of Defendants’ wrongful conduct, Lead Plaintiffs and

the Class have suffered damages in connection with their purchase of Carbo common stock and their

transactions in Carbo options contracts.

COUNT II

Violation of Section 20(a) of the Exchange Act Against the Individual Defendants

93. Lead Plaintiffs repeat and re-allege each allegation above as if fully set forth herein.

94. Each of the Individual Defendants, by reason of their status as senior executive

officers and directors of Carbo, directly or indirectly, controlled the conduct of the Company’s

business and its representations to Lead Plaintiffs and the Class, within the meaning of §20(a) of the

Exchange Act. The Individual Defendants directly or indirectly controlled the content of the

Company’s SEC statements and press releases related to Lead Plaintiffs’ and the Class’ investments

in Carbo common stock and options contracts within the meaning of §20(a) of the Exchange Act.

Therefore, the Individual Defendants are jointly and severally liable for the Company’s fraud, as

alleged herein.

95. The Individual Defendants controlled and had the authority to control the content of

the Company’s SEC statements and press releases. Because of their close involvement in the

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everyday activities of the Company, and because of their wide-ranging supervisory authority, the

Individual Defendants reviewed or had the opportunity to review these documents prior to their

issuance, or could have prevented their issuance or caused them to be corrected.

96. The Individual Defendants knew or recklessly disregarded the fact that Carbo’s

representations were materially false and misleading and/or omitted material facts when made. In so

doing, the Individual Defendants did not act in good faith.

97. By virtue of their high-level positions and their participation in and awareness of

Carbo’s operations and public statements, the Individual Defendants were able to and did influence

and control Carbo’s decision-making, including controlling the content and dissemination of the

documents that Lead Plaintiffs and the Class contend contained materially false and misleading

information and on which Lead Plaintiffs and the Class relied.

98. The Individual Defendants had the power to control or influence the statements made

giving rise to the securities violations alleged herein, and as set forth more fully above.

99. As set forth above, the Defendants each violated §10(b) of the Exchange Act and

Rule 10b-5, thereunder, by their acts and omissions as alleged herein. By virtue of their positions as

controlling persons, the Individual Defendants are also liable pursuant to §20(a) of the Exchange

Act.

100. As a direct and proximate result of the Individual Defendants’ wrongful conduct,

Lead Plaintiffs and the Class suffered damages in connection with their purchase of Carbo common

stock and transactions in Carbo options contracts.

PRAYER FOR RELIEF

WHEREFORE, Lead Plaintiffs pray for relief and judgment, as follows:

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A. Determining that this action is a proper class action, certifying Lead Plaintiffs as class

representatives and designating Lead Counsel as Class Counsel under Rule 23 of the Federal Rules

of Civil Procedure;

B. Awarding compensatory damages in favor of Lead Plaintiffs and the other Class

members against all Defendants, jointly and severally, for all damages sustained as a result of

Defendants' wrongdoing, in an amount to be proven at trial, including interest thereon;

C. Awarding Lead Plaintiffs and the Class their reasonable costs and expenses incurred

in this action, including counsel fees and expert fees; and

D. Such other and further relief as the Court may deem just and proper.

JURY TRIAL DEMANDED

Lead Plaintiffs hereby demand a trial by jury.

DATED: August 14, 2012 ROBBINS GELLER RUDMAN & DOWD LLP

SAMUEL H. RUDMAN MARIO ALBA JR. FAINNA KAGAN

42Q > MARIO AL".

58 South Service Road, Suite 200 Melville, NY 11747 Telephone: 631/367-7100 631/367-1173 (fax) srudmanrgrdlaw.com malba@rgrdlaw.com fkaganrgrdlaw.com

Lead Counsel for Stock Class

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FARUQI & FARUQI, LLP FRANCIS P. McCONVILLE RICHARD W. GONELLO EMILY C. KOMLOSSY 369 Lexington Avenue, 10th Floor New York, NY 10017-6531 Telephone: 212/983-9330 212/983-9331 (fax) fmcconvi11efaruqilaw.com rgorme1lofaruqilaw.com ekom1ossyfaruqi1aw.com

Lead Counsel for Options Class

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CERTIFICATE OF SERVICE

I, Fainna Kagan, hereby certify that on August 14, 2012, I caused a true and

correct copy of the attached:

Consolidated Amended Class Action Complaint for Violations of Federal Securities Laws

to be: (i) filed by hand with the Clerk of the Court; and (ii) served by first-class mail on

the following counsel:

David E. Brodsky, Esq. Roger A. Cooper, Esq. Breon S. Peace, Esq. Cleary Gottlieb Steen & Hamilton LLP One Liberty Plaza New York, NY 10006

Famna Kagan