Arconic, Inc. Securities Class Action
Company: Arconic, Inc. (NYSE:ARNC)
Class Period: November 4, 2013 – June 26, 2017
Lead Plaintiff Deadline: September 11, 2017
Court: Southern District of New York
WASHINGTON, DC (July 17, 2017) — U.S. Market Advisors Law Group PLLC announces that a class action lawsuit has been filed on behalf of purchasers of Arconic, Inc. (“Arconic” or the “Company”) (NYSE:ARNC) securities. The lawsuit seeks to recover damages for Arconic investors under the federal securities laws.
Any member of the putative class may move the Court to serve as lead plaintiff through attorneys of their choice, or may choose to do nothing and remain an absent class member. The lead plaintiff will direct the litigation and participate in important decisions including whether to accept a settlement for the class in the action. The lead plaintiff will be selected from among applicants claiming the largest loss from investment in Arconic securities during the relevant period. Members of the class will be represented by the lead plaintiff and attorneys chosen by the lead plaintiff.
If you wish to choose attorneys to represent you and the class, you must apply to be appointed lead plaintiff no later than September 11, 2017. If you wish to join the litigation, complete the contact form below to be contacted by an attorney to discuss your rights or interests regarding this class action. There is no obligation or cost to you.
About the Lawsuit
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.