Kobe Steel Ltd. Securites Class Action Filing

Kobe Steel Securities Fraud Class Action Investigation and Complaint

U.S. Market Advisors Law Group PLLC, in coordination with co-counsel, has filed a securities fraud class action on behalf of investors of Kobe Steel, Ltd. (OTC: KBSTY; KBSTF). The proposed class action complaint is intended to recover losses suffered by investors who purchased Kobe Steel securities in the U.S. between May 29, 2013 and October 12, 2017.

Please complete the Follow-Up Form below for more information on participating in the action. You may also directly contact David P. Abel, Managing Attorney at USMA Law Group, for more information: 202-274-0237; info@usmarketlaw.com.

USMA Law Group’s findings and a copy of the filed complaint are provided below.  Additional information may be added periodically.

Table of Contents

Filed Complaint

Click on the image above to access the complaint

Summary Allegations

According to the Complaint, throughout the Class Period, Kobe Steel repeatedly misrepresented the quality of its products and the integrity of its operations by emphasizing that it offers “excellent products and services” with “special attention to product safety” as it has “an organizational culture that is highly sensitive to compliance issues.”
Defendants’ statements pertaining to Kobe Steel’s products and performance of its operations were materially false and misleading because the company had intentionally falsified data on many of its aluminum, copper, iron and steel products, and knowingly sold products that failed quality control tests.

During the week of October 13, 2017, Kobe Steel admitted to falsifying inspection certificates on its core products in its aluminum and copper and iron and steel segments and not complying with customer standards. As a result, Kobe Steel ADRs cumulatively declined $2.37 or approximately 40% during that week.


Company Information

Kobe Steel is one of Japan’s largest steel manufacturers and a major supplier of aluminum and copper products. The Company’s other business segments include wholesale power supply machinery, construction machinery, real estate and electronic materials. The Company uses “Kobelco” as its corporate logo and brand name for its worldwide operations.

Kobe Steel was founded in Japan in 1905 and has since developed global operations. The Company has approximately 36,000 employees across Japan, the America, Asia and Europe. Kobe Steel sells its products to more than 500 customers around the world.

CompanyKobe Steel Ltd.IndustryIron & Steel
HeadquartersJapanSegmentsRevenue (2017)
TickerKBSTY; KBSTF
    Iron & SteelDate
    37%
ExchangeOTC Markets
    Aluminum & Copper
    19%
CUSIP499892107; J34555250
    Kobelco Construction Machinery
    18%
Market Cap.$3.4 Billion
    Machinery Division
    9%
52 Week High-Low Range$3.50 – $6.27
    Engineering Division
    7%
Next Earnings ReportJanuary 31, 2018
    Welding
    5%
Final Internal Investigation DuePending
    Others
    4%


Class Period Stock Performance


Timeline of Significant Events

  • October 8, 2017 – Kobe Steel issues a press release acknowledging that certain company products did not comply with customer standards and certificates had been falsified.
  • October 10, 2017 – Reuters publishes an article detailing additional information about the Kobe Steel falsification scandal including statements made by one of the company’s executive managing officers.
  • October 12, 2017 – Bloomberg publishes an exposing that the company’s fake data scandal included its core business of steel to large companies overseas.
  • October 13, 2017 – Kobe Steel issues a press release providing updated information about its internal investigation, listing numerous nonconforming products the company had identified to date. On the same day, several media outlets reported that the number of impacted customers had more than doubled from initial estimates.
  • October 17, 2017 – Kobe Steel announces that its American unit, Kobe Steel USA, had received a request from the U.S. Department of Justice Department for documents and records related to any substandard metals sold to customers in the United States.
  • October 18, 2017 – The European Aviation Safety Agency, Europe’s aviation regulator, advises aircraft manufacturers to stop using parts supplied by Kobe Steel until their safety can be verified.
  • October 20, 2017 – Reuters reports that Kobe Steel “sank deeper into crisis…as the embattled company said it had lost some customers to competitors because of widespread data falsification that had extended to its mainstream steel sheet business.” Kobes Steel “also said it had violated statutory standards set by the industry ministry, pushing the scandal beyond failure to meet specifications agreed with customers.”
  • October 27, 2017 – Reuters reports that Kobe Steel supplied (unused) parts with false specifications for nuclear equipment owned by Japan Nuclear Fuel Ltd.
  • November 7, 2017 – The Japan Times reports that some Kobe Steel directors may have given silent approval for product data, according to unnamed sources. Some directors formerly worked at plants where the falsification was committed, the sources said.
  • November 10, 2017 – Kobe Steel releases the findings from its initial internal investigation. The company claims a lack of quality controls and focus on profits was behind the pervasive data falsification.
  • November 15, 2017 – Kobe Steel’s Hatano plant, one of its main copper plants, is stripped of its industrial quality certifications after an investigation into its quality control.
  • November 17, 2017 – Japan’s transportation ministry announces that it ordered Kobe Steel to improve management at its Daian plant in central Japan.
  • December 21, 2017 – Kobe Steel issued a press release announcing that its Independent Investigation Committee has thus far identified three executives “of the Aluminum & Copper Business…as having been aware of part of the misconduct.” Accordingly, “the IIC will diligently continue its investigative activities to find out the motivation and background, among others.” Later in the day, The Financial Times published an article discussing the demotion of the “three executives who were aware of the data tampering behind the company’s recent cheating scandal.” Significantly, the article pointed out that “[t]wo of those executives knew of the falsification problems as far back as 2009, while one became aware only this year.”

USMA Law Group Press Release – October 12, 2017

Investor Alert: U.S. Market Advisors Law Group PLLC Announces an Investigation of Kobe Steel, Ltd.

WASHINGTON, D.C. – U.S. Market Advisors Law Group PLLC (USMA Law Group) announces that it is investigating claims on behalf of investors of Kobe Steel, Ltd. (OTC: KBSTY). Kobe Steel investors are encouraged to obtain additional information by contacting the firm.

Kobe Steel is a Japanese manufacturer with global operations. USMA’s investigation concerns whether Kobe Steel and certain of its executives have violated federal securities laws. A potential class action lawsuit resulting from the investigation would seek monetary recoveries for shareholders damaged by any alleged conduct.

On October 8, 2017, Kobe Steel acknowledged falsifying data about the quality of its aluminum, copper and steel it sold to customers. The company disclosed that, “in its Aluminum & Copper Business, including group companies, a portion of the products traded with customers did not comply with the product specifications which were agreed between the Company and its customers. Data in inspection certificates had been improperly rewritten etc., and the products were shipped as having met the specifications concerned.” Accordingly, hundreds of companies across the world appear to have purchased substandard materials used in the manufacturing of cars, airplanes and numerous other products.

As a result of this news, the price of Kobe Steel shares declined by approximately 40% throughout the next two trading days.

If you purchased over-the-counter shares of Kobe Steel in the United States or are aware of any facts relating to this matter, you can assist this investigation by contacting attorney David P. Abel of USMA Law Group: 202-274-0237, dabel@usmarketlaw.com.

Tentative Investigation Parameters
Company: Kobe Steel Ltd.
Ticker: OTC: KBSTY
CUSIP: 499892107
Investment Period: October 12, 2012 – October 8, 2017

About USMA Law Group
USMA Law Group is a national law firm based in the District of Columbia. The firm represents investors in antitrust, securities and shareholder litigation. To learn more, visit usmarketlaw.com.

Contact
U.S. Market Advisors Law Group PLLC
David P. Abel | Licensed in DC, SC
202-274-0237| dabel@usmarketlaw.com


USMA Law Group Press Release – December 4, 2017

KOBE STEEL INVESTOR ALERT: Investors Who Suffered Losses In Kobe Steel Ltd. Are Encouraged to Contact U.S. Market Advisors Law Group PLLC

WASHINGTON, D.C. – U.S. Market Advisors Law Group PLLC announces that it has completed an initial investigation on behalf of investors of Kobe Steel, Ltd. (OTC: KBSTY; KBSTF). As a result of its findings, the firm has prepared, but not yet filed, a proposed class action complaint to recover losses suffered by Kobe Steel investors. The proposed complaint and other relevant information may be found on the firm’s Kobe Steel webpage: http://usmarketlaw.com/kobesteel. You may also contact attorney David P. Abel for more information: 202-274-0237 or dabel@usmarketlaw.com.

Investigation Findings
USMA Law Group’s preliminary investigation concerned whether Kobe Steel and certain of its officers and directors violated federal securities laws. The firm focused on Kobe Steel’s repeated statements about the quality of its products and integrity of its operations. The firm’s investigation (and Kobe Steel’s own admissions) provide reason to believe that the company’s statements pertaining to the specifications of its products and effectiveness of its operations were materially false and misleading.

Kobe Steel allegedly failed to disclose that: (1) the company falsified data on many of its aluminum, copper and steel products; (2) the company sold products that failed quality control tests; (3) the company’s compliance initiatives, corporate governance and risk management activities were ineffective and inadequate at preventing product data manipulation; and (4) the company’s internal reporting systems failed to foster employee participation and adequately address employee concerns.

On October 8, 2017, these revelations began to emerge, when Kobe Steel issued a press release disclosing that the company’s products did not comply with customer standards and certificates had been falsified. As a result of this news, and subsequent revelations, the price of Kobe Steel securities declined more than 40% per share, damaging investors.

Investors who purchased shares of Kobe Steel in the United States and suffered losses are encouraged to contact the firm for more information about the proposed lawsuit and their ability to participate: http://usmarketlaw.com/kobesteel.

About USMA Law Group
USMA Law Group is a national law firm based in the District of Columbia. The firm represents investors in antitrust, securities and shareholder litigation. To learn more, visit www.usmarketlaw.com.

Contact:
U.S. Market Advisors Law Group PLLC
David P. Abel | Licensed in DC, SC
202-274-0237| info@usmarketlaw.com


Investor Notice – December 26, 2017

U.S. Market Advisors Law Group PLLC Files Class Action Lawsuit Against Kobe Steel, Ltd.

U.S. Market Advisors Law Group PLLC, in coordination with co-counsel, has filed a class action lawsuit against Kobe Steel, Ltd. (OTC:KBSTY) (OTC:KBSTF) and certain of its officers, in the United States District Court for the Southern District of New York (17-cv-10085), on behalf of all persons who purchased or acquired American Depositary Receipts (“ADRs”) of Kobe Steel on the open market in the U.S., during the period May 29, 2013 through October 12, 2017, and were damaged thereby. This action alleges claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.

If you are a member of the Class, you may file a motion no later than February 26, 2018 to be appointed lead plaintiff. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. Investors who purchased Kobe Steel ADRs during the Class Period and suffered losses are urged to contact Wolf Popper to discuss their rights.

Kobe Steel is one of Japan’s largest steel manufacturers and a major supplier of aluminum and copper products.

During the Class Period, Kobe Steel repeatedly misrepresented the quality of its products and the integrity of its operations by emphasizing that it offers “excellent products and services” with “special attention to product safety” as it has “an organizational culture that is highly sensitive to compliance issues.”

Defendants’ statements pertaining to Kobe Steel’s products and performance of its operations were materially false and misleading because the company had intentionally falsified data on many of its aluminum, copper, iron and steel products, and knowingly sold products that failed quality control tests.

During the week of October 13, 2017, Kobe Steel admitted to falsifying inspection certificates on its core products in its aluminum and copper and iron and steel segments and not complying with customer standards. As a result, Kobe Steel ADRs cumulatively declined $2.37 or approximately 40% during that week.

About USMA Law Group
USMA Law Group is a national law firm based in the District of Columbia. The firm represents investors in antitrust, securities and shareholder litigation. To learn more, visit www.usmarketlaw.com.

Contact:
U.S. Market Advisors Law Group PLLC
David P. Abel | Licensed in DC, SC
202-274-0237| info@usmarketlaw.com

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