On March 18, 2011, a press release was announced. The complaint charges Vestas and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Vestas engages in the development, manufacture, sale, and maintenance of wind technology products — i.e., wind turbines — which utilize wind to generate electricity. The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s financial revenues and earnings, as well as its fiscal year 2010 financial guidance. As a result of defendants’ false and misleading statements regarding the Company’s financial performance and outlook, Vestas’ American Depository Receipts (“ADRs”) and ordinary shares traded at artificially inflated prices throughout the Class Period, reaching a high of $26.00 and $78.05 per share, respectively, on November 9, 2009.
On August 17, 2010, Vestas issued its second quarter 2010 results and downwardly revised its 2010 financial outlook for revenue and earnings, admitting that hundreds of millions of Euros of wind system contracts expected to be recognized in 2010 — particularly in the United States — would have to be deferred. On this news, the Company’s ADRs and ordinary shares trading in the United States declined 22.5% in one day. Two months later, on October 26, 2010, before the U.S. markets opened, the Company admitted that it had failed to adopt the International Financial Reporting Interpretations Committee’s Interpretation 15, Agreements for the Construction of Real Estate (“IFRIC 15”), a new accounting standard effective January 1, 2010, and as a result its 2010 financial statements would likely require correction as they were not in compliance with International Accounting Standards (“IAS”). In reaction to this news, Vestas’ securities dropped another 10%.
According to the complaint, the true facts, which were known by defendants but concealed from the investing public during the Class Period, were as follows: (a) defendants caused Vestas to improperly account for its revenue in violation of IAS by failing to timely adopt IFRIC 15; and (b) defendants failed to account for the effect of IFRIC 15 in determining Vestas’ financial outlook and as a result they lacked a reasonable basis to provide financial guidance for the Company’s fiscal year 2010.
A similar, purported class action complaint was also filed in the U.S. District Court for the District of Oregon.
On May 24, 2011, the Plaintiff filed a Notice voluntarily dismissing the Complaint without prejudice.