공지 • Mar 22
Bragar Eagel & Squire, P.C. Files Class Action Lawsuit Against The Chemours Company
Bragar Eagel & Squire, P.C announced that a class action lawsuit has been filed against The Chemours Company (“Chemours” or the “Company”) in the United States District Court for the District of Delaware on behalf of all persons and entities who purchased or otherwise acquired Chemours securities between February 10, 2023 and February 28, 2024, both dates inclusive (the “Class Period”). Investors have until May 20, 2024 to apply to the Court to be appointed as lead plaintiff in the lawsuit. After the market closed on February 9, 2023, Chemours announced its fourth quarter and full year 2022 financial results. As is relevant here, Chemours announced Free Cash Flow (defined as cash flows from operations, less purchases of property, plant, and equipment) of $94 million in the fourth quarter of 2022 and $447 million in full year 2022, “demonstrating [Chemours’s] continuing ability to generate strong Free Cash Flow.” The following day, February 10, 2023 (the first day of the Class Period), Chemours filed its 2022 annual report on Form 10-K (the “2022 Annual Report”) with the SEC and reiterated that it generated Free Cash Flow of $447 million in full year 2022. In connection with the 2022 Annual Report, the Company’s CEO Mark Newman and then CFO Sameer Ralhan certified the accuracy of the Company’s financial reports and the adequacy of the Company’s internal control over financial reporting. According to the complaint, notwithstanding Defendants’ repeated assurances regarding the accuracy of the Company’s financial reports and the adequacy of the Company’s internal control over financial reporting, investors began to learn the truth on February 13, 2024, when Chemours “announced that it has postponed the release of its financial results and conference call related to the fourth quarter and full year ended December 31, 2023, which had previously been scheduled for February 14, 2024 and February 15, 2024, respectively,” and that it now “expect[ed] to issue its fourth quarter and full year 2023 financial results after market close on February 28, 2024.” According to the Company, the delay was necessary “because it needs additional time to complete its year-end reporting process” and “is evaluating its internal control over financial reporting with respect to maintaining effective controls related to information and communications.” Chemours also revealed that it needed additional time for its Audit Committee to conduct a related internal review. In response to this initial development, the price of Chemours common stock fell $3.85 per share, or more than 12%, from a close of $30.49 per share on February 13, 2024, to close at $26.64 per share on February 14, 2024. Then, before the market opened on February 29, 2024, Chemours stunned investors when it announced that it was delaying the filing of its annual report for 2023 and that its Board of Directors had “place[d] President and Chief Executive Officer Mark Newman, Senior Vice President and Chief Financial Officer Jonathan Lock and Vice President, Controller and Principal Accounting Officer Camela Wisel on administrative leave pending the completion of an internal review being overseen by the Audit Committee of the Board of Directors with the assistance of independent outside counsel.” According to the Company, the scope of the investigation “includes the processes for reviewing reports made to the Chemours Ethics Hotline” and Chemours’s “practices for managing working capital, including the related impact on metrics within the Company’s incentive plans [and] certain non-GAAP metrics” in the Company’s financial reports. Given the importance of these issues—not only to executive compensation, but also investors’ assessment of Chemours’s financial performance—the Company acknowledged that it “is evaluating one or more potential material weaknesses in its internal control over financial reporting as of December 31, 2023 with respect to maintaining effective controls related to the control environment, including the effectiveness of the ‘tone at the top’ set by certain members of senior management.” In response to these revelations, the price of Chemours common stock plummeted $9.05 per share, or more than 31%, from a close of $28.72 per share on February 28, 2024, to close at $19.67 per share on February 29, 2024. The Complaint alleges that, throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business and operations. Specifically, Defendants misrepresented and/or failed to disclose that: (1) certain of the Company’s senior executive officers manipulated Free Cash Flow targets as a means to maximize additional cash and stock incentive compensation applicable to executive officers pursuant to the Company’s AIPs and LTIPs; (2) the Company’s accounting practices and procedures, including its internal control over financial reporting, were deficient; and (3) as a result, Defendants’ statements about the Company’s business, operations, and prospects lacked a reasonable basis.