Van Nuys Firm Accused of Inflating Stock Price : Courts: A lawsuit charges Superior Industries with deceiving investors. Scores of similar actions have been filed against companies in recent years.
A class-action shareholder lawsuit has been filed against Superior Industries International Inc., accusing the Van Nuys auto wheel manufacturer of fraudulently manipulating its stock price.
The complaint, filed in U.S. District Court in Los Angeles earlier this month by shareholder Barry L. May, states that the company and its executives made “false and misleading statements” about Superior’s business and profit potential in order to artificially inflate its stock price. It also contends that company insiders profited from the alleged scheme by selling shares at the inflated prices.
The lawsuit seeks unspecified damages.
Superior, in a prepared statement, denied the allegations and said it would “vigorously defend” itself against the complaint.
If the language in the lawsuit sounds familiar, it might be because scores of similar lawsuits have been filed against companies in recent years. Like the Superior lawsuit, most are filed as class-action claims by investors who say they have been deceived by executives’ unjustifiably optimistic projections or failure to disclose bad news.
And many of those complaints are filed on behalf of the shareholders by the same controversial law firm that is representing May: Milberg Weiss Bershad Hynes & Lerach of San Diego.
The reputed king of these shareholder suits is the firm’s William Lerach, whom one legislator has accused of using “legalized extortion” against corporations. Other shareholder lawsuits Lerach has been involved with include actions against biotechnology giant Amgen and the health-maintenance organization WellPoint. He has also filed class-action lawsuits on behalf of Orange County bondholders, and investors involved in the ZZZZ Best and Bank of Credit & Commerce International scandals.
The Superior lawsuit was filed on behalf of investors who purchased the company’s stock between March 31 and Sept. 7. It also names Superior Chairman Louis L. Borick and several other managers and directors of the company as defendants.
According to the complaint, Superior’s stock price fell from a high of $46.25 a share in January 1994 to $23.75 by mid-March 1995. With the value of their stock options declining, the lawsuit states, Superior’s top executives determined to push the stock price back up and, beginning in March, made a series of false statements about the company’s prospects. By July 26, the share price had rebounded to $35.50, it says.
May purchased his 100 shares of Superior stock on July 6, at $32.38 a share, the complaint says.
The lawsuit also says that Superior executives withheld bad news that could have negatively impacted the stock, including weakening demand for its products, slowing orders and production problems.
During that period, the complaint alleges, Superior executives sold stock at prices as high as $35 a share, pocketing $6.2 million. Then in August, it says, the stock price began to decline and in September the company “shocked the securities markets” by stating that it expected its earnings for the third and fourth quarters of 1995 and for 1996 to fall below previous forecasts.
Superior’s stock currently trades at about $26 a share.
