The original complaint charges the company and certain of its current and former officers with violations of the Securities Exchange Act of 1934. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Company continued to maintain unprofitable product lines, such as glass and powertrain systems, even when faced with declining North American auto sales and rising raw-material costs; (2) that the Company was overly dependent on Ford Motor Co., as 70 percent of Visteon's revenue came from Ford; (3) that the Company failed to adequately control costs; (4) that the Company improperly accounted for certain retiree health care and pension benefits, and income taxes and as a result Visteon had to reverse $9 million in expense reductions for U.S. post-retirement life and health care costs and to adjust the valuation allowance on deferred tax assets by $17 million; (5) that as a result of the foregoing the Company's financial results were in violation of Generally Accepted Accounting Principles ("GAAP") and were materially inflated at all relevant times; and (6) that as a consequence of the above, the defendants had no reasonable basis for positive statements about Visteon's financial condition.
The complaint further alleges on or around January 31, 2005, Visteon announced preliminary fourth quarter and full year results for 2004. For the full year 2004, Visteon recorded a net loss of $1.489 billion, or $11.88 per share. In addition, Visteon's management has recommended the review and preliminary restatement of the Company's financial statements for 2002, 2003 and the first three fiscal quarters of 2004. News of this shocked the market. As a result, shares of Visteon fell $0.51, or 6.43 percent, on January 31, 2005 to close at $7.42 per share.
As summarized by the Company’s FORM 10-K for the fiscal year ended December 31, 2007, in February 2005, a shareholder lawsuit was filed in the U.S. District Court for the Eastern District of Michigan against the Company and certain current and former officers of the Company. In July 2005, the Public Employees’ Retirement System of Mississippi was appointed as lead plaintiff in this matter. In September 2005, the lead plaintiff filed an amended complaint, which alleges, among other things, that the Company and its independent registered public accounting firm, PricewaterhouseCoopers LLP, made misleading statements of material fact or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. The named plaintiff seeks to represent a class consisting of purchasers of the Company’s securities during the period between June 28, 2000 and January 31, 2005. Class action status has not yet been certified in this litigation. On August 31, 2006, the defendants motion to dismiss the amended complaint for failure to state a claim was granted. The plaintiffs have appealed this decision.
According to an Order dated April 30, 2007, from the U.S. Court of Appeals for the Sixth Circuit, upon consideration of the parties' motion to stay proceedings pending. Supreme Court's decision in Tellabs Inc. v. Makor Issues & Rights, Ltd., (06-484),
It is ordered that the motion be and it hereby is granted. It is further ordered that the appellant submit written status reports every sixty days beginning May 25, 2007.
On August 29, 2008, the District Court filed the Judgment from the U.S. Court of Appeals for the Sixth Circuit. The Sixth Circuit affirmed the District Court’s decision to dismiss the action. On October 6, 2008, an Amended Judgment affirming the dismissal of the action was filed.