According to a press release dated April 9, 2009, the complaint charges the company and certain of its officers with violations of the Exchange Act. The company is a vertically integrated mining and metals company. The Company consists of several business segments, including coal and steel production. The company’s mining business consists of coal, iron ore and nickel mines in Russia. The Company’s steel business includes the production and sale of semi-finished steel products, carbon and specialty long products, carbon and stainless flat products and downstream metal products.
The complaint alleges that, throughout the Class Period, defendants failed to disclose material adverse facts about the Company’s financial well-being, business relationships, and prospects. Specifically, we allege that defendants failed to disclose or indicate the following: (i) that the Company had engaged in anticompetitive conduct by employing a discriminatory pricing policy for raw material sales between domestic and foreign steel firms; (ii) that the Company had engaged in monopolistic conduct by fixing and maintaining coking coal prices at artificially high levels and unreasonably refusing contracts; (iii) that as the Company’s anticompetitive and monopolistic practices were discovered, the Company would incur a significant level of fines, and would be forced to enter into long term coking coal supply contracts below market prices; (iv) that a portion of the Company’s revenue was derived from anticompetitive and monopolistic conduct, and when such behavior was discovered, the Company’s revenue would significantly decline in future periods; (v) that the Company had used a sophisticated sales and distribution scheme involving wholly owned offshore trading companies to evade paying taxes on a portion of its revenue; (vi) that the Company lacked adequate internal and financial controls; (vii) that the Company’s financial statements were not prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”); and (viii) that, as a result of the foregoing, the Company’s financial statements were materially false and misleading at all relevant times.
According to the complaint, on July 24, 2008, Russian Prime Minister Vladimir Putin called for antitrust authorities to investigate The company’s raw material pricing policy, and in particular its coking coal sales, as the Company had sold raw materials to customers in Russia at twice that it had sold raw materials to non-Russian customers. Prime Minister Putin also recommended that The company’s profit margins needed to be examined by the antitrust authorities, and “if need be,” by the special committee of the General Prosecutor. On this news, the Company’s shares fell $13.77 per share, or over 37.6 percent, to close on July 24, 2008 at $22.84 per share, on unusually heavy trading volume.
Then on July 28, 2008, Prime Minister Putin also revealed that the company had also used offshore traders to minimize tax payments. According to the Prime Minister, the company sold coal to a Swiss trading unit at a quarter of domestic prices, contributing to a coal shortage and higher steel prices in Russia. On this news, the Company’s shares fell $6.70 per share, or over 25.5 percent, to close on July 28, 2008 at $19.50 per share, on unusually heavy trading volume.
On June 25, 2009, an order was entered consolidating the interested cases. The Board of Trustees of the City of Fort Lauderdale General Employees' Retirement System, Teamsters Local 807 Labor Management Pension Fund, Local 138 Pension Trust Fund and the City of Westland Police and Fire Retirement System were appointed as co-lead plaintiffs in the consolidated action. Lastly, Coughlin Stoia Geller Rudman & Robbins LLP and Abraham, Fruchter & Twersky, LLP were appointed as co-lead counsel.
On October 29, 2009, a consolidated amended complaint was filed by the co-lead plaintiffs against the defendants.
On February 19, 2010, a consolidated second amended class action complaint was filed by the co-lead plaintiffs in this case against the defendants.
On August 9, 2011, the Court issued an order and opinion granting the defendants' motion to dismiss the second amended complaint without leave to amend. The Clerk's Judgment was entered on August 10, 2011. The case is now closed.
On September 9, 2011, the Plaintiff filed a Notice of Appeal to the Second Circuit.