Treankler v. Ferroglobe PLC et al 1:19-cv-00629-RA — On January 22, 2019, investors sued Ferroglobe PLC (“Ferroglobe” or the “Company”) in United States District Court, Southern District of New York. The GSM class action alleges that plaintiffs acquired Ferroglobe stock at artificially inflated prices between August 21, 2018 and November 26, 2018 (the “Class Period”). They are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during that time. For more information on the GSM lawsuit, please contact us today!
Summary of the Allegations
According to its website, Ferroglobe (NASDAQ: GSM) is now among “the largest producers of a wide variety of metal alloys and other metallic products.”
As such, Ferroglobe says it relies on state-of-the-art-technology to provide the best products, “which are critical ingredients in many industrial and consumer products.” The Company claims that taking this approach put it “at the forefront of silicon-based alloys production, but also provide manganese, ferrosilicon alloys and silica fume among others.”
In all, the Company has four business divisions or segments, and operations in Spain, United States, France, Canada, South Africa, Argentina, Venezuela and China. Most of its customers are engaged in some sort of manufacturing or production.
Summary of Facts
Ferroglobe and two of its senior officers (the “Individual Defendants” are now accused of deceiving investors by lying and withholding critical information about the Company’s business practices and prospects during the Class Period.
Specifically, they are accused of omitting truthful information about the demand for its products from SEC filings and related material. By knowingly or recklessly doing so, they allegedly caused Ferroglobe stock to trade at artificially inflated prices during the time in question.
The truth came out on November 26, 2018, when the Company reported “poor financial results” for the third quarter 2018. One of the Individual Defendants then attributed the lackluster results to “market conditions in our main products [that] deteriorated through Q3.”
On a conference call held to discuss the financial results with analysts the next day, the same Individual Defendant stated that “the most significant driver of the Q3 results was reduced pricing, specifically average sales price for silicon metal declined 4.9% versus Q2 2018 [due to] silicon production at high rates, the impact of customers stocking up in anticipation of the trade case, and “availability of aluminum scrap.” He also stated that the sales of silicon metal “were impacted by the availability of aluminum scrap, which is now burdened by a 25% tariff on imports from the U.S. into China.”
A closer look…
As alleged in the January 22 complaint, the Company and/or Individual Defendants repeatedly made false and misleading public statements during the Class Period.
For instance, in a press release issued at the beginning of the Class Period, the one of the Individual Defendants stated in pertinent part: “Prices of our products have remained broadly stable overall, and current supply/demand dynamics in our industry should support continued healthy pricing.”
Then, during a conference call with analysts held on August 22, 2018, the same person also stated in pertinent part: “despite some pricing declines in the U.S. an in European indices, Ferroglobe maintained a flat realized average selling price for silicon metal, reflecting a well-managed commercial strategy and a good mix of fixed and index price contracts.”
On the same conference call, the same person added: “the overall supply/demand tension in the market, as we as increasing input costs, provide good reason to expect prices [of silicon metal] to remain broadly stable around these levels.”
Impact of the Alleged Fraud on Ferroglobe’s Stock Price and Market Capitalization
|Closing stock price prior to disclosures:
|Closing stock price the trading day after disclosures:
|One day stock price decrease (percentage) as a result of disclosures:
The following chart illustrates the stock price during the class period:
Actions You May Take
If you have purchased shares during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole.
NOTE: The deadline to file for lead plaintiff in this class action is March 25, 2019. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court. Typically, the plaintiff or plaintiffs with the largest losses are appointed lead plaintiff.
In order to identify your potential exposure to the alleged fraud during the time in question, you may wish to perform an analysis of your transactions in Ferroglobe common stock using court approved loss calculation methods.
Recently Filed Cases
Listed below are recently filed securities class action cases being monitored by us, along with the class period and the deadline to file a motion to be appointed as the Lead Plaintiff in the action. Please contact us if you would like an LK report for any of these cases:
Levi & Korsinsky is a leading securities litigation firm with a hard-earned reputation for protecting investors’ rights and recovering losses arising from fraud, mismanagement and corporate abuse. With thirty attorneys and offices in New York, Connecticut, California and Washington D.C., the firm is able to litigate cases in various jurisdictions in the U.S., England, and in other international jurisdictions.
Levi & Korsinsky provides portfolio monitoring services for high-net worth investors and institutional clients. Our firm also assists investors in evaluating whether to opt-out of large securities class actions to pursue individual claims.