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Can Rome survive another fall?

Jason Cannon April 9, 2013

At last month’s Mid-America Trucking Show, Navistar was among the must-see attractions.

The company, still working to dig itself out from under its big bore EGR engine nightmare, had some extraordinarily impressive trucks and technology on display.

At a press event, a confident Troy Clarke delivered an encouraging economic outlook tempered with just the right amounts of reality and humility.

He starred. Stole the show.

The company’s 13-liter engine was barely a month from hitting the market. The company’s Cummins-partnered 15-liter was making positive waves in the market and hit all key target dates on or ahead of schedule.

Things were looking up and spring was supposed to be a season of re-genesis, setting the stage for a major comeback next year.

After a fairly disastrous 2012, Navistar was rebuilding Rome.

What a difference three weeks make.

You can sue anybody for anything at any given time, but you don’t toss around the word “fraud” loosely.

That word appears 12 times in a 33-page class action filing against Navistar, former CEO Dan Ustain and CFO Andrew J. Cederoth.

The word “false” is in there 17 times.

“Misleading” is in there 19 times.

Ouch.

The suit suggests that, at a time when the plaintiffs – the Construction Workers Pension Trust Fund – and countless other investors were pumping hundreds of thousands of dollars into Navistar based solely on forecasts and outlooks provided by the company’s leadership, two of Navistar’s highest ranking officials were cashing out their chips.

The suit claims between Nov. 3, 2010 and Aug. 1, 2012, the pension’s trust fund purchased 6,709 shares of Navistar stock for a total of roughly $246,000.

As the stock price bottomed out, the fund jumped ship and ate $81,000 – dumping their investment at around $24.59 per share.

In that same time frame, the filing says Ustain sold 55,469 shares for $3.9 million – more than $70 per share. Cederoth supposedly followed suit, liquidating 9,548 shares for $642,962 – more than $67 per share.

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Jason Cannon is Online Managing Editor for Truck Parts & Service.

You can follow me on twitter at @By_Jason_Cannon

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