Former Navistar CEO, CFO named in lawsuit
Navistar’s former Chief Executive Dan Ustian and the company’s chief financial officer, Andrew Cederoth, have been named in a class action lawsuit against the company according to a filing with United States District Court for the Northern District of Illinois.
The lawsuit was filed on behalf of Construction Workers Pension Trust Fund Lake – County and Vicinity and “others similar situated” who bought company shares between Nov. 3, 2010 and Aug. 1, 2012. The suit claims the pension’s trust fund purchased 6,709 shares of Navistar stock for a total of roughly $246,000 and sold them for about $165,000 as stock prices tumbled following Navistar abandoning plans to produce a big bore EGR engine.
At least three law firms nationwide have formed a line in Illinois district court, each charging Navistar and select officers and directors with violating provisions of the Securities Exchange Act of 1934.
Notably, the complaints allege the defendants made numerous misrepresentations, including that (1) Navistar’s attempted methods to achieve compliance with EPA guidelines in truck manufacturing had failed and Navistar would be forced to revise its plan to meet guidelines, incurring enormous costs to the company; (2) Navistar did not have engines ready to meet the 2010 EPA standards; and (3) Navistar’s filings with the Securities and Exchange Commission contained incomplete and misleading disclosures, including statements about the costs of recalls and details of various debts.
According to the complaint, the stock price at its peak was artificially inflated based Navistar’s claims its EGR program would and could meet EPA certification.
“When defendants revealed Navistar’s true financial condition and future business prospects, the price of Navistar common stock fell over 69 percent from its Class Period high,” according to the filing.
Navistar common stock traded as high as $70.17 per share on April 26, 2011. After the early August announcement that their EGR efforts were a bust, common stock sank to $21.44 per share.
During the same period, the lawsuit claims Ustian personally sold more than 55,000 shares for nearly $3.9 million and Cederoth sold more than 9,500 shares for $642,962, all while the stock price was near record highs.
Former U.S. Securities and Exchange Commission attorney Willie Briscoe, along with securities litigation firm Powers Taylor, LLP, have joined the parade of attorneys investigating legal claims against the officers and Board of Directors of Navistar International Corp.
“Based upon the recent revelations about alleged improper business practices and procedures regarding key aspects of Navistar’s business, our firms are investigating possible breaches of fiduciary duties and other violations of state law by Navistar’s officers and directors,” Briscoe says.
Class action lawsuits targeting Navistar and its leadership have begun to stack up in recent days.
Citing company policy, Navistar spokesperson Elissa Koc said she could not comment on pending litigation.