Fushi Copperweld, Inc.
Class Period: Aug 14, 2007 to May 4, 2011
Lead Plaintiff Deadline: Aug 21, 2011 + Deadline passed
Summary of Case:
A securities class action has been filed against Fushi Copperweld, Inc. ("Fushi" or the "Company") on behalf of all persons who purchased or otherwise acquired the securities of Fushi between August 14, 2007 and May 4, 2011, inclusive (the "Class Period"). This case has been filed in the United States District Court of the Middle District of Tennessee.
The complaint alleges that Fushi and certain of its officers and/or directors made materially false and misleading statements during the Class Period in press releases, analyst conference calls, and filings with the Securities and Exchange Commission ("SEC").
Fushi is a producer of bimetallic wire products, principally copper-clad aluminum ("CCA") and copper-clad steel ("CCS") products. The Company sells bimetallic wire products to customers worldwide that operate primarily in the telecommunications, electrical utility, and transportation industries. Fushi is located in Dalian, China.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company's business practices and financial results. Specifically, defendants failed to disclose that the Company was not performing as well as represented and its financial statements were misstated due to improper practices, including inappropriately applying hedge accounting to a cross currency interest swap derivative entered into in April 2007. As a result of defendants' false statements, Fushi stock traded at artificially inflated prices during the Class Period, reaching a high of $27.00 per share in December 2007.
On March 11, 2011, Fushi issued a press release announcing its preliminary fourth quarter and full year 2010 earnings results. The Company preliminarily reported revenue growth to approximately $69.9 million for the fourth quarter 2010 and revenue growth to $265 million for the fiscal year 2010. Additionally, the Company announced it was reevaluating the application of Generally Accepted Accounting Principles ("GAAP") in certain accounting treatments applied to its 2007, 2008 and 2009 financial results and its previously filed quarterly financial statements for the first three quarters of 2010.
On this news, Fushi shares dropped by $1.68 per share, to close at $7.74 per share on March 16, 2011 - a three day decline of 18%. However, the positive statements prevented a complete collapse in Fushi's share price. Subsequently, on March 29, 2011, Fushi filed a Form 8-K with the SEC disclosing that its Audit Committee had concluded that the Company's previously reported financial statements for the years ended December 31, 2009, 2008 and 2007 and its unaudited interim financial statements for the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010 should be restated and should no longer be relied upon. The Company claimed this was due to two errors in the application of GAAP regarding: (a) the accounting for a cross currency interest swap derivative; and (b) the acquisition of Dalian Jinchuan Electric Cable Co., Ltd. ("Dalian Jinchuan") and Shanghai Hongtai Industrial Co., Ltd. On this news, Fushi shares dropped by $0.19 per share, to close at $8.12 per share on March 30, 2011, a one-day decline of 2.3% per share. Then, on May 4, 2011, Fushi issued a press release announcing its first quarter 2011 financial results. The Company reported revenue of $65.9 million and net income of $6.8 million, or $0.18 diluted earnings per share ("EPS"), below analysts' estimates of EPS of $0.23. The release attributed some of the disappointment to customers not stocking at the same levels as past quarters.
As a result of defendants' false statements and omissions, Fushi securities traded at artificially inflated prices during the Class Period. However, after the above revelations seeped into the market, the Company's shares were hammered by massive sales, sending them down 68% from their Class Period high of $27.00.
If you purchased this company's shares during the Class Period and suffered a loss or for further information about the case, please review the links below.