August 3, 2020 - Judgement in favor of the defendants was entered by the court.
June 24, 2020 - The court granted the defendants' motion to dismiss. The plaintiff was given leave to amend the complaint.
January 24, 2020 - A motion to dismiss the consolidated complaint was filed.
November 22, 2019 - A consolidated complaint was filed.
May 28, 2019 - An investor in shares of A. O. Smith Corporation (NYSE: AOS) filed a lawsuit in the U.S. District Court for the Eastern District of Wisconsin over alleged violations of Federal Securities Laws by A. O. Smith Corporation in connection with certain allegedly false and misleading statements made between July 26, 2016 and May 16, 2019.
Milwaukee, WI based A. O. Smith Corporation manufactures and markets residential and commercial gas and electric water heaters, boilers, tanks, and water treatment products in North America, China, Europe, and India. A. O. Smith Corporation reported that its annual Total Revenue rose from over $2.99 billion in 2017 to over $3.18 billion in 2018 and that its Net Income increased from $296.5 million in 2017 to $444.2 million in 2018.
Shares of A. O. Smith Corporation (NYSE: AOS) grew from $41.22 per share in December 2018 to as high as $56.66 per share on April 18, 2019.
Then, on May 16, 2019, J Capital Research published a report raising questions about A.O. Smith’s revenue from China as well as its access to $539 million—or about 84% of the Company’s total cash at year end 2018—sitting in China.
Shares of A. O. Smith Corporation (NYSE: AOS) declined from over $55 per share in April 2019 to as low as $42.56 per share on May 17, 2019.
According to the complaint the plaintiff alleges on behalf of purchasers of A. O. Smith Corporation (NYSE: AOS) common shares between July 26, 2016 and May 16, 2019, that the defendants violated Federal Securities Laws.
More specifically, the plaintiff claims that between July 26, 2016 and May 16, 2019, the Defendants failed to disclose to investors that the Company had undisclosed business connections and entanglements with UTP through which it funneled up to 75% of its China product sales, that the Company had used UTP to engage in channel stuffing by artificially inflating inventories purportedly sold through distributors that were not based on consumer demand, thereby approximately doubling the normal level of inventory at such distributors, that the Company had used its UTP relationship to artificially inflate the sales figures it reported to investors by as much as 8% and to conceal worsening sales trends that the Company was experiencing in China, that the Company’s sales growth had been primarily in lower margin products as its higher priced products were being undercut by competition in “second-tier” Chinese cities, causing the Company to experience significant market pressures, that the Company had increased its cash reserves in China to over $530 million in furtherance of its channel stuffing and sales manipulation scheme, encumbering the Company’s ability to repatriate the cash for use for capital expenditures, and as a result, the Company’s public statements were materially false and misleading at all relevant times.