Securities Fraud Suit Filed against Electronics Firm Harman International
On June 23, 2015, the U.S. Court of Appeals for the District of Columbia ruled to reinstate a securities fraud class action lawsuit against electronics company, Harman International Industries Inc., and, more specifically, against three of its high-ranking executives.
Plaintiffs alleged that back in April of 2007, the company announced that it would potentially acquire the well known private equity firm Kohlberg, Kravis, Roberts & Company based in New York. However, plaintiffs claimed the company overstated the likelihood of the acquisition, as well as misled investors about past and future sales of its electronic products, particularly navigation system devices. The suit claimed that these statements artificially inflated the stock price, costing investors when the acquisition fell apart in 2008. The company then released lackluster financial results that did not match its previous statements, and the stock price dropped by 24%.
Plaintiffs’ suit was halted in 2014 by the District Court for Washington, D.C., which ruled that the statements made by the company and its executives were properly made and legally permissible optimistic predictions accompanied by required cautionary language. However, the recent Court of Appeals ruling has restarted the suit and will allow it to move forward again, albeit with a restriction. Only one of the statements claimed by plaintiffs to be fraudulent and misleading was cleared by the Court of Appeals to be actionable, and is thus it is the only one that will continue in the suit. All other statements that appear in the initial suit made by plaintiffs will be discarded in conjunction with the District Court ruling and are no longer justiciable in any court.
The news comes on the tail of Harman International’s released good news: Harman has completed the acquisition of Bang & Olufsen Automotive Company, which provides audio products for Audi, Aston Martin, BMW, and Mercedes-Benz car models. It has not yet been predicted how the negative press regarding the continuing securities fraud lawsuit will affect the stock price and investors’ feelings when the acquisition of Bang & Olufsen is taken into account, but Harman executives continue to be optimistic regarding the company’s outlook and futures.
If you were an investor with Harman International Industries, Inc. during the time period pertaining to Harman’s cited statements, you are likely not able to join the class-action suits. However, you may be able to retain your own legal representation and initiate a claim of your own. For all of the currently active suits, unless you do retain counsel, you are not represented by any attorneys, including those that initiated the suit in question.
If you’ve been the victim of securities fraud, consider seeking advice from an attorney. Depending on your case, you could recover your lost capital. You can contact an experienced investment and financial attorney at Carlson & Associates, P.A. in Miami at 1-305-372-9700 today for a consultation.