According to the law firm press release, the complaint charges Magna and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Magna is a one of the largest and most diversified suppliers of automotive components, systems and modules world-wide. Magna maintains manufacturing and engineering and sales operations in 26 countries around the globe.
The complaint alleges that, during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and prospects. Specifically, defendants misrepresented and/or failed to disclose the following adverse facts: (i) that the Company had entered into long-term European customer contracts at steeply discounted prices; (ii) that the Company was experiencing ongoing undisclosed quality control issues at its European facilities that were resulting in higher production costs; (iii) that, as a result of the foregoing, Magna was experiencing a significant decline in its European margins; (iv) that defendants’ representations about the Company’s disclosure controls were materially false and misleading; and (v) that, based on the foregoing, defendants lacked a reasonable basis for their positive statements about the Company’s European operations and business prospects during the Class Period.
On August 5, 2011, Magna issued a press release announcing its operating results for its 2011 fiscal second quarter, the period ended June 30, 2011. For the quarter, the Company announced net income of $282 million, or $1.15 per diluted common share, significantly less than Wall Street estimates.
Following the Company’s 2011 second quarter earnings announcement, defendants held a conference call with analysts and investors wherein it was explained that, while Magna’s year-over-year sales increased by 24%, the Company’s weaker than expected results were primarily caused by long standing, under-priced European customer contracts and quality control issues in Europe. In response to the revelations about the Company’s European operations, the price of Magna common stock dropped from $44.24 per share on August 4, 2011 to $39.42 on August 5, 2011, as the artificial inflation came out of the price of Magna stock.
On July 31, 2012, the Court issued an Order appointing lead plaintiff and approving the selection of lead counsel.
On October 1, 2012, the Plaintiffs filed an amended class action complaint.
On August 22, 2013, the Court issued an Order granting defendants' motions to dismiss. On September 20, the Lead Plaintiff filed a Notice appealing this Order.