Shareholder Rights Attorneys Pile on ECOtality as it Struggles to Survive
Shareholder rights attorneys at Robbins Arroyo LLP announce that an investor of ECOtality, Inc. has filed a complaint in the U.S. District Court for the Northern District of California. This follows the announced last week that the company is considering bankruptcy. The company's announcement last week followed an announcement from the Department of Energy (DOE), which awarded ECOtality nearly $100 million to build electric vehicle chargers, that it recently suspended stimulus payments to the company. No additional comments were forthcoming from ECOtality by publication time.
The complaint alleges that the company and certain of its officers and directors violated the Securities Exchange Act of 1934 between April 16, 2013 and August 9, 2013 (the "Class Period"). ECOtality, together with its subsidiaries, engages in designing, manufacturing, testing, and commercializing electric vehicle charging and energy storage systems.
According to the complaint, ECOtality made false and/or misleading statements regarding the company's performance and business prospects. Specifically, the complaint alleges that the company and certain officers and directors failed to disclose that: (i) design and manufacturing defects in some of the company's charging systems had been linked to overheating and the melting of some connector plugs when charging electric vehicles; (ii) the company failed to attain sales volumes of its commercial Electronic Vehicle Service Equipment necessary to sustain the company's operations in the second half of 2013; (iii) the company was unable to release its new Minit Charger industrial product because of prototype performance shortfalls; (iv) the company had been unable to obtain additional financing sufficient to meet its short-term or long-term capital needs; and (v) the company was required to pay $855,000 in wages and damages to the U.S. Department of Labor.
According to the complaint, on August 12, 2013, ECOtality disclosed in a filing with the U.S Securities and Exchange Commission that the company hired a restructuring adviser to review its business options. According to the disclosure, the company's options included acquiring new financing, the possible sale of the company, or a bankruptcy filing in the "very near future." On this news, ECOtality stock price dropped nearly 80%, or $1.16, to close on August 12, 2013 at $0.30 per share.