A law office has recently filed a securities class action claim against a Japanese multinational conglomerate following allegations the company released materially false and misleading statements.
The class action suit was filed against Toshiba Corporation in the United States District Court for the Central District of California on behalf of investors who purchased shares in the company during the class period between May 8, 2012 and May 7, 2015, according to a press release. Toshiba is a self-described “world leader and innovator in pioneering high technology.” The company focuses on consumer electronics and digital life products.
Toshiba class action suit filed following investigations into infrastructure accounting
The class action claim alleges that Toshiba made false or misleading statements regarding the company’s future business, operations, prospects and revenue. Specifically, it claims the defendants fooled investors about how much certain infrastructure projects would cost, thus misguiding stakeholders about profits and losses for these initiatives.
Toshiba sells consumer electronics, among other things.On April 3, 2015, the company announced the formation of a special investigation committee tasked with examining the accounting of certain infrastructure projects. On news of the special committee, shares of TOSYY fell $1.23 per share, or over 4 percent, to close at $24.56 per share on April 6, 2015, the press release reported. Meanwhile, shares of TOSBF fell $0.16 per share, or more than 3 percent, to close at $4.13 per share on the same day.
Additional reports on accounting problems lead shares to fall further
Just over a month later, on May 8, the company issued another press release. This communication detailed the creation of an independent investigation committee meant to look at the accounting of certain infrastructure projects, as well as potentially revise earnings reports from prior years.
Further May reports on the accounting probes led to even deeper tumbles for Toshiba stock prices. A May 10 BARRON’S ASIA report stated that Toshiba “[f]ell 16.7 percent this morning on Tokyo after the electronics maker launched an accounting probe.”
“On July 21, 2015, CEO Hisao Tanaka and eight other executives resigned.”
“Several construction projects have understated costs,” A spokesperson for the company explained, according to the press release. “Toshiba earned about 11% of its operating income from its power and social infrastructure business in 2013.”
On this news, shares of TOSYY fell $5.75 per share, or over 23 percent, to close at $18.33 per share on May 11. Additionally, shares of TOSBF fell $0.88 per share, or more than 22 percent, to close at $3.09 per share on the same day.
On July 21, 2015, CEO Hisao Tanaka and eight other executives resigned, citing a cover up that began in 2008. They took responsibility for doctoring the company books, resulting in a $1.2 billion inflation of profits over the course of several years.