A law firm has announced that a class action has been commenced in the U.S. District Court for the District of Kansas on behalf of purchasers of YRC Worldwide Inc. securities between April 24, 2008, and Nov. 2, 2009. The complaint filed by Robbins Geller Rudman & Dowd alleges that, throughout the class period, defendants failed to disclose material adverse facts about the company’s true financial condition, business and prospects.
The complaint, which charges YRCW officers and directors with violations of the Securities Exchange Act, alleges that defendants misrepresented and overstated the financial condition of the company and had the intended effect of causing YRC shares to trade at artificially inflated levels throughout the class period – reaching a class period high of more than $20 per share during August 2008. On Oct. 29, 2008, YRCW issued a press release announcing that it had eliminated 3,750 jobs at the company’s various units, representing roughly 6 percent of YRCW’s total work force of 58,000, as part of its “ongoing efforts to revamp operations.”
The complaint alleges that throughout the balance of the class period, YRCW continued to deceive the investing public by making positive financial announcements about the company until Nov. 2, 2009, when YRCW shocked investors when it revealed, for the first time, that the company was performing well below expectations and that it now expected to convert over half a billion dollars of debt into shares of company stock, thereby effectively giving bondholders as much as 95 percent of the equity of the company and resulting in the resignation of seven of its nine directors.
Shares of YRC stock plummeted on this news, falling 64 percent on a single trading day and more than $2.30 per share, to close at only $1.32 per share on Nov. 2, 2009. The plaintiff, represented by Robbins Geller, seeks to recover damages on behalf of all purchasers of YRCW securities during the class period.