CASES
Sonova Holdings AG
Class Period: Dec 1, 2010 to Mar 15, 2011
Summary of Case:
The claims stem from the profit warning issued by the Company on or around March 16, 2011, in which Sonova announced new sales and earnings outlook for the business year 2010/2011 (hereafter the "Profit Warning"). According to the claims, investors were surprised by its magnitude and timing. The stock price reacted by losing more than 23% in a single trading day, destroying CHF 1.6 billion of market value. The stock price has not recovered since.
The claims allege that the company's management blamed (i) the recall of a recently-launched product on the American market (the "Advanced Bionics cochlear implant"), (ii) delayed sales growth in traditional hearing instruments, notably because of the harsh winter conditions, and (iii) negative current currency effects. According to the Company, these events took place in February 2011.
Claimants believe, among other things, that the Profit Warning should have been issued much earlier than March 16th, 2011, and possibly even earlier than the beginning of March, as it cannot be excluded that the aforementioned elements were known by the management well before March 2011. In other words, the Company cannot blame only the disappointing level of sales of February 2011 to justify the Profit Warning, as it can be interfered from publicly known facts that the launch of new products have been experiencing serious problems as from late 2010. Investors having purchased shares throughout that period have not been informed in a fully transparent and timely manner of the business difficulties encountered by the Company in Europe and the USA during the winter.
Moreover, it is noteworthy that pursuant to the Swiss Stock Exchange website directors and senior managers sold about 2.4 million shares and warrants between February 1, 2011, and the date of the Profit Warning. Executive members of the board of directors and/or members of the senior management massively started selling shares and warrants as from March 1, 2011, according to regulatory filings. Such public information is rather uncomfortable for the insiders and the Company, knowing that during that period of time around 5 million shares were traded on the Swiss Stock Exchange. Sales by management therefore constituted almost 50% of total volumes during that period.
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