Shares of battery manufacturer A123, which has ties to the green energy sector, plummeted after it was hit with a class action lawsuit.
Bloomberg Businessweek reports:
THE SPARK: The law firm Pomerantz Haudek Grossman & Gross LLP filed the federal class-action lawsuit Monday on behalf of shareholders who bought the company’s stock between Feb. 28, 2011 and March 23.
Pomerantz alleges that A123 withheld information about the defective products from shareholders. After the lawsuit was filed, other law firms sent out press releases soliciting plaintiffs to join the legal action.
THE BIG PICTURE: Many investors were already worried that A123 might not have enough money to cover the cost of replacing the batteries. Five customers—including Fisker Automotive, the company’s biggest client—received parts that could have had defective cells.