Skip to comments.Class Action Filed Against Taxpayer-Backed First Solar
Posted on 03/19/2012 11:31:14 AM PDT by jazusamo
Securities law firms are lining up to get a piece of the action after a class action lawsuit was filed against federally subsidized First Solar, Inc., allegedly because the company failed to disclose the massive costs it was incurring due to defects in its solar panels, leading investors to believe the companys stock was worth more than its actual value.
The complaint, filed by the New York-based Pomerantz, Haudek, Grossman, & Gross law firm, claims that First Solar executives including founder Michael Ahearn and former CEO Robert Gillette made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. The false information was allegedly delivered via annual and quarterly reports, SEC filings, press releases and other documents. First Solar is a public company traded on the NASDAQ exchange.
According to the complaint, First Solar: deceive(d) the investing public , artificially inflated(d) and maintain(ed) the market price of First Solar securities , and cause(d) Plaintiff and other members of the Class to purchase First Solar securities and options at artificially inflated prices.
First Solar has received enormous financial backing from taxpayers. TheDepartment of Energy provided a $646 million loan guarantee for the Antelope Valley (Calif.) Solar Ranch 1 project, and also partially guaranteed $1.46 billion inborrowing for its Desert Sunlight Solar Farm west of Blythe, Calif. DOE loans of $967 million covered First Solars Agua Caliente Solar project in Yuma County, Ariz. Its Topaz Solar farm, which Warren Buffett just bought for about $1.9 billion, also qualifies for a federal grant (like the others) that pays a 30 percent rebate on construction costs. Also, the U.S. Export-Import Bank backed $455.7 million in loans to First Solar for projects in Canada. The facilities also reap job training , state and local incentives, in addition to enjoying mandates that force utilities to buy their renewable power.
The company is yet another on a long list of participants in the Green energy crony capitalism carnival. Federal candidates reaped benefits of the Ahearns and several other First Solar employees largesse, according to the Center for Responsive Politics. Michael Ahearn donated $40,400 to the Democratic Senatorial Campaign Committee since 2008. Company executives and staffers also gave $37,158 to President Obama and various other Democrat candidates for Congress during that time.
At the state level, Ahearn and his wife Gayle also listed as a co-owner donated $65,000 to the Democratic Party of Arizona since the 2008 electoral cycle. First Solar extracted at least $51.5 million in incentives from state and local government in Arizona to build a manufacturing facility in Mesa. And the company also spent heavily in that gravy train of states for renewable incentives, California. Bloomberg reported the company gave more than $150,000 to Golden State political campaigns last year, and has received $3.43 million in state sales tax credits.
Much of the companys money troubles apparently stem from the thin-film solar panels it is deploying at these government-backed desert sites. According to an Arizona Republic report from earlier this month, the panels produce less electricity in extreme heat well understood within the industry but First Solars performance still failed to meet expectations. The company reported it replaced $125.8 million-worth of panels in the 4th quarter last year, and has set aside $37.5 million to cover future claims. It experienced a drop of $345 million in net sales from the previous quarter as well.
The warranty issues are a big deal, to us at least, Credit Suisse analyst Satya Kumar wrote in an investor note on February 29, the Republic reported. This is the first time First Solar is talking about this issue . The fact that First Solar is reporting performance issues in the field in the first few years and is accruing higher charges on an ongoing basis is worrying, as the hotter regions tend to make more sense for solar. We are concerned this may not be the last time we hear of the warranty-related issues for First Solar.
The Tempe, Ariz.-based manufacturer also disclosed in its annual report on February 29 that the Securities and Exchange Commission is investigating it for violations of Regulation Fair Disclosure. According to The Street financial Web site , the possible violations arose relating to the failure of the Topaz Solar Farm project to meet the deadline to receive a federal loan guarantee from the U.S. Department of Energy.
The financial ailments are showing manifestations with employment. First Solar announced in December that 100 positions would be eliminated, including 60 at a research and development center in Santa Clara, Calif. Among those departing was the companys chief technologist, Markus Beck, who served in the same role for Solyndra before joining First Solar in 2008. Clearly that does not bode well. NLPC also reported in January that half the employees at the Antelope Valley project had been laid off.
Investors in First Solar who purchased stock (FSLR) between April 2008 and last month may be eligible to join the class action lawsuit, the Pomerantz lawsuit says. In February 2011 the stock price peaked at just above $175. Upon reporting its 2011 results, shares fell $4.10 or 11 percent, to $32.30. This morning it is below $29. 24/7 Wall Street called First Solar as one of the 13 worst big stock stories of 2011.
Paul Chesser is an associate fellow for the National Legal and Policy Center.
Taxpayers are on the hook for over $4 BILLION DOLLARS from this Obama crony scam, ALONE!!!
Yep, it kinda makes Solyndra look like a bump in the road and this may be just the beginning.
FuirstSolar, another OBAMA company (Solar companies are like mushrooms... they are spread by BS!!!)
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