WASHINGTON, DC (July 17, 2017) — U.S. Market Advisors Law Group PLLC announces that a class action lawsuit has been filed against Arconic, Inc. (“Arconic” or the “Company”) (NYSE:ARNC) and certain of its senior executives. The class action is on behalf of investors who purchased or otherwise acquired Arconic securities, seeking to recover compensable damages caused by defendants’ violations of the Securities Exchange Act of 1934. The case has been docketed under 17-cv-05312 in United States District Court for the Southern District of New York.
If you are a shareholder who purchased Arconic securities between November 4, 2013 and June 26, 2017(“Class Period”), you have until September 11, 2017 to ask the Court to appoint you as Lead Plaintiff for the class. The Lead Plaintiff is a representative for absent members of the class.
Investors do not need to seek appointment as Lead Plaintiff to share in any class recovery in this action. If you are a class member and there is a recovery for the class, you can share in that recovery as an absent class member. You may retain counsel of your choice to represent you in this action. Contact USMA Law Group to discuss this action.
Arconic Inc. is a global provider of lightweight multi-material solutions, focused on the aerospace market in addition to serving the automotive, industrial gas turbine, commercial transportation, and building and construction markets. The Company also provides titanium, aluminum, nickel-based super alloy, and specialty alloy solutions.
Arconic’s aluminum Reynobond panels consist of two sheets of thin aluminum, each permanently bonded to an extruded thermoplastic core. These panels are combined with insulation to form cladding used to cover residential and office towers and other commercial
structures. Throughout the Class Period, Arconic boasted that “Reynobond is a fully tested product, with building-code approvals throughout the world.”
Reynobond panels come either with a Polyethylene (“PE”) core, which is combustible, or a more expensive Fire Resistant (“FR”) core. Throughout the Class Period, Arconic’s sales personnel knowingly marketed and sold the Polyethylene core product, Reynobond PE, the cheaper of the two products, to customers for inappropriate uses, such as for use on residential high-rise towers.
Allegations Against Arconic
According to the Complaint, throughout the Class Period, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Arconic knowingly supplied its highly flammable Reynobond PE (polyethylene) cladding panels for use in construction; (ii) the foregoing conduct significantly increased the risk of property damage, injury and/or death in buildings constructed with Arconic’s Reynobond PE panels; and (iii) as a result of the foregoing, Arconic’s public statements were materially false and misleading at all relevant times.
Despite the known combustibility of the Reynobond PE panels, resulting in prohibitions against installing them in high-rise structures in the U.S. and Europe, Arconic has nonetheless sold millions of dollars of the combustible panels for use in projects Acronic knew were not appropriate for the product and which presented a fire hazard. Arconic’s U.K. sales were $711 million during 2016, $698 during 2015, $464 million during 2014, $475 million during 2013 and $438 million during 2012. During that same five year period, Arconic’s total sales of “Architectual aluminum systems” worldwide, which include Reynobond panels, only amounted to $1,010 during 2016, $951 during 2015, $1,002, during 2014, $702 during 2013 and $692, meaning lot of the Reynobond PE systems being sold were being sold in the U.K.
With the Company’s global sales having taken a tremendous hit in the fallout from the global financial crisis, Arconic’s sales personnel, particularly in the construction industry, worked under intense pressure to make every sale possible, leading to multiple violations of the Company’s strong corporate integrity, safety and environmental values often lauded during the Class Period.
As a result, throughout the Class Period, Arconic reported billions of dollars in revenues and hundreds of millions of dollars in earnings only made possible by sales of Reynobond panels that potentially exposed the Company to the risk of massive civil, regulatory and criminal liability. With these sales practices concealed from the investment community, the price of Arconic common and preferred stock traded at artificially inflated prices throughout the Class Period, with the common stock reaching a Class Period high of nearly $40 per share in intraday trading on November 21, 2014. These materially false statements and omissions also permitted Arconic to improve its corporate debt ratings, which facilitated Arconic selling $1.250 billion in debt securities and another $1.250 in depository shares in two underwritten securities offerings on September 18, 2014.
The Truth is Revealed
On June 14, 2017, a fire broke out at the 24-story Grenfell Tower apartment block in London. The fire burned for roughly 60 hours, destroying the building and causing at least 80 deaths and over 70 injuries.
On June 24, 2017, The New York Times published an article entitled “Why Grenfell Tower Burned: Regulators Put Cost Before Safety”, describing the causes of the Grenfell Tower fire and attributing the rapid spread of the fire to the highly flammable Reynobond PE cladding panels manufactured by Arconic.
On that same day, Reuters published an article entitled “Arconic knowingly supplied flammable panels for use in tower: emails,” revealing that Arconic sales managers were aware that flammable panels would be distributed for use at Grenfell Tower.
On June 26, 2017, Arconic issued a press release announcing it would discontinue global sales of Reynobond PE for use in high-rise buildings after the material was suspected to have contributed to the spread of the deadly fire at the Grenfell Tower apartment complex in London.
The Guardian also reported on Monday June 26th that the U.K. Department for Communities and Local Government had instituted a “combustibility testing programme” for aluminum composite materials and that in early testing, 60 samples from buildings in 25 areas were classed as combustible, with approximately 540 then still yet to be tested. Over the prior weekend, following the fire, hundreds of Londoners in public housing structures clad with Reynobond panels had been forced to evacuate due to immediate safety concerns.
The New York Times reported that “[i]nvestigators ha[d] found 75 buildings across Britain that ha[d] similar cladding, and hundreds of apartments were evacuated on Friday [June 23rd] amid fears they faced similar fire risks.”
As further reported by the Times on June 26th, “[t]he Metropolitan Police ha[d] also said they [would] consider manslaughter among other charges,” because “in Britain, corporations can be charged with manslaughter.”
On these disclosures, Arconic’s common share price fell $3.70, or 14.49%, to close at $21.84 on June 27, 2017.
U.S. Market Advisors Law Group PLLC is a national law firm based in Washington, D.C. The firm represents investors worldwide in U.S. securities class action lawsuits.
David P. Abel