A class action suit against Shiloh Industries has been filed in U.S. District Court for the Southern District of New York.
The complaint accuses the company of securities fraud stemming from problems at its Wellington location.
According to court documents, the company announced Sept. 9 that it could not file its quarterly report on time for the period ending July 31 due to an ongoing internal investigation into costs at the Maple Street facility.
The news sent shares tumbling 16.7 percent the next day, the suit claims.
The suit was filed Sept. 21 by one Raymond Thomas. The law firm of Bronstein, Gewirtz & Grossman sent a release seeking additional plaintiffs who bought Shiloh Industries stock between March 9 and Sept. 14 of this year.
The release alleges that Shiloh “issued materially false and misleading statements to investors” and possibly engaged in irregular accounting practices related to surcharges assessed on steel at the Wellington site.
As a result, earnings and income were overstated, the law firm claims, and Shiloh statements about its business and prospects were misleading. The company reported $275.2 million in revenues and $20.2 million in profits for the third quarter.
“The company has taken steps to remediate the internal control deficiencies, including replacing the financial leader at the company’s Wellington facility,” the class action complaint states.
That news contributed to shares closing down another 16 percent in mid-September.
Parties have until Nov. 20 to join the suit, which was filed in New York due to the court’s jurisdiction of matters pertaining to the Securities Exchange Commission.
Shiloh Industries is incorporated in Delaware and has its executive offices in Valley City, Ohio.
Jason Hawk can be reached at 440-647-3171 or @EditorHawk on Twitter.