The complaint alleges that, between January 25, 2006 and July 27, 2006, Plexus failed to disclose that the company’s position in the defense market was weakening and that operations in the United Kingdom would have to be reorganized. Because of this information, Plexus lacked a “reasonable basis” for the positive statements it made during that period about the company’s future growth.
According to the complaint, Plexus “shocked investors” when, on July 27, 2006, the company lowered its earnings outlook for the year, based in part on limited revenue growth. The plaintiff alleges that this news caused shares of the company’s stock to fall $10.71 per share, or approximately 32 percent, to close at $22.89 per share.
The complaint alleges that, in a conference call following the July 26 quarterly report, Dean Foate, president, CEO and chairman of the board of directors, said that fourth quarter revenue outlook was softer than had been previously implied.
Foate and F. Gordon Bitter – chief financial officers – and John Nussbaum, who also served as chairman of the board, are all named individually as defendants.
The complaint alleges that because Foate, Bitter and Nussbaum controlled the contents of the company’s reports to the Securities and Exchange Commission and the public, they had the opportunity to correct the statements. According to the plaintiff, the defendants knew that the statements made by Plexus were “materially false and misleading.”
The suit also accuses corporate officers and board members of insider trading, alleging that company officers were motivated to misrepresent revenue growth to allow company insiders to “sell 664,666 shares of their personally-held Plexus common stock for gross proceeds in excess of $26.3 million.”
The suit claims that Foate, Bitter and Nussbaum all benefited from selling stock during this period, as well as executive officers Michael Verstegen, Joseph Kronser, Thomas Czajkowski, David Clark, Paul Ehlers, David Rust, Joseph Kaufman, Simon Painter and George Setton and board members Ralf Boer, David Drury and Thomas Prosser.
The second lawsuit, filed June 29 by the Alan M. Ozell Trust, reasserts the accusation that Plexus withheld relevant information that caused the stock price to drop, but does not accuse anyone in the company of insider trading.
Both lawsuits request compensation for all damages in an amount to be proven at trial, as well as costs and expenses.
Plexus issued a statement on June 25 acknowledging that a class action complaint had been filed against the company, though Plexus claimed it had not yet received a copy of the complaint.
“Plexus believes that all of its public statements were correct and properly made; it thus intends to defend itself vigorously in this litigation,” according to the statement.
Angelo Ninivaggi, vice president, general counsel and secretary for Plexus, did not return a call requesting an updated statement.
The law firms of Ademi & O’Reilly, LLP and Lerach Coughlin Stoia Geller Rudman & Robbins LLP are representing the plaintiffs in both cases. The lawsuits were filed in the U.S. District Court for the Eastern District of Wisconsin.