The now Chinese-owned A123 Systems is being hit with class action lawsuits for possibly misleading investors by not disclosing the company’s financial problems.
The law firm Levi & Korsinsky LLP announced a class action lawsuit against the government-backed battery maker for not disclosing the company’s grim financial outlook to investors following the financial collapse of luxury hybrid automaker, Fisker Automotive.
A123 challengers allege that the company did not disclose the fact that the financial downfall of Fisker, its main customer, would impact its business. After Fisker defaulted and was cut off from receiving government funds, A123 conducted a public offering without telling investors that Fisker was in bad shape, the lawyers contend.
Other law firms have also jumped onto the class action suit, asking that investors who suffered losses from A123 come forward and sign onto the legal challenge.
“If you have suffered a net loss from investment in A123 Systems, Inc. securities purchased on or after February 28, 2011, and held through any of the revelations of negative information on November 4, 2011, May 11, 2012, and/or October 16, 2012, as described below, at no cost to you may obtain additional information about this lawsuit and your ability to become a lead plaintiff,” writes the law firm Brower Piven.
The law firm Wolf Haldenstein Adler Freeman & Herz LLP announced that it was investigating potential securities fraud claims against A123 as well.
A123 was given $249.1 million by the Obama administration as part of the 2009 stimulus package, along with more than $100 million in grants and tax credits from the state of Massachusetts.
Despite all this government aid, the company suffered financially when A123′s major customer defaulted on its loans in February 2011 and was cut off from getting further government funds itself. A123 was forced to lay off about 123 workers in November 2011 and officially filed for bankruptcy in October 2012.
The company was eventually bought out by the North American subsidiary of the Chinese-owned Wanxiang Group, an auto parts conglomerate. A123 was cleverly renamed B456 — which is also apparently the name of a fire extinguisher.
Those who held A123 stock took on huge losses, as the company’s share price went from a high of $9.48 per share in February 2011 to pennies later that year, contend those suing the company.
Wolf Haldenstein Adler Freeman & Herz did not respond to The Daily Caller News Foundation’s request for comment.
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