A class action lawsuit was filed against First Solar by Pomerantz Haudek Grossman & Gross in the US District Court for the District of Arizona. The complaint states that between April 30, 2008 and February 28, 2012, First Solar violated the Securities Exchange Act of 1934 by not disclosing the full extent of certain manufacturing flaws on its earnings, that it improperly recognized revenue for certain products in its systems business, that it lacked sufficient internal and financial controls and, finally, that as a result, First Solar’s statement were materially false and misleading at all relevant times.
The complaint claims that on February 29, First Solar reported a decrease of US$345 million in net sales for the quarter that ended December 31, 2011, and a US$164 million charge for warranty payments to replace equipment that cause premature power loss in certain panels. The plaintiff is looking to recover damages on behalf of all First Solar shareholders who purchased common stock during the Class Period detailed above.
As is the nature of class action cases other law firms have come forward, citing similar claims, including a national securities law firm, Faruqi & Faruqi, law firm, Howard G. Smith and Rigrodsky & Long, P.A.
Often these are actions are to attract shareholders to serve as lead plaintiff in a case already filed, but must be registered with the court by a set time. In this case May 14th, 2012 is a deadline. Those that purchased First Solar shares between April 30, 2008 and February 28, 2012 are said to be eligible.
First Solar Shareholders are being given the opportunity to seek legal counsel from several firms after a class action lawsuit was filed in the US District Court for the District of Arizona last week. Case No. 12-cv-00555, alleges that between April 30, 2008 and February 28, 2012, potential securities fraud and an over-concentration of shares in First Solar stock led to investment losses.
Securities arbitration law firm, Klayman & Toskes, noted that trading was at over US$300 per share in July 2008 and is now only trading at around US$30 per share, an almost 90% decline. Harwood Feffer, LLP, further pointed out that on February 29, First Solar revealed its financial results for Q4 and the full year 2011, reporting a quarter-over-quarter drop of US$345 million in net sales, “primarily due to the timing of revenue recognition in our systems business and lower for module-only sales.”
First Solar also advised that it had incurred a charge of US$164 million for warranty payments to replace defective equipment, including a reserve of US$37.5 million to cover future claims.