Robbins Umeda LLP* Announces Class Action Suit Against AgFeed Industries, Inc.
October 18, 2011 (San Diego, CA) – Robbins Umeda LLP announces that the firm commenced a class action lawsuit on October 18, 2011, in the U.S. District Court for the Middle District of Tennessee, Nashville Division, on behalf of all persons or entities who purchased or otherwise acquired the securities of AgFeed Industries, Inc. (“AgFeed” or the “Company”) (NASDAQ: FEED) between March 16, 2009 and August 2, 2011 (the “Class Period”). The action is against the Company and certain of the Company’s officers for violations of the Securities Exchange Act of 1934.
AgFeed is an international agribusiness that deals in animal nutrition products and commercial hog production in the United States and China. During the Class Period, the Company’s principal executive offices were located in Hendersonville, Tennessee. However, the Company’s executive offices are currently located in Grand Junction, Colorado.
The complaint alleges that beginning on March 16, 2009, the Company, along with certain officers and directors at AgFeed, issued a series of materially false and misleading statements to investors about its financial health that were designed to deceive the market and cause shares of AgFeed to trade at artificially high prices.
In particular, the complaint alleges that officials at the Company failed to disclose to investors material adverse facts that: (1) AgFeed’s collection efforts and credit dealings with its animal nutrition customers were not working because the “formula based analysis” the Company relied on in determining accounts receivable and reserves for doubtful accounts was flawed; (2) allowances for doubtful accounts were wildly undervalued; (3) accounts were overvalued and bad debts were undervalued, causing reported asset values to be overstated and expenses to be understated; and (4) AgFeed exaggerated its market edge as the combination of overstated assets and understated expenses resulted in creating an illusion of heightened profitability and failed to provide a “long-term picture” of the Company’s value.
On August 2, 2011, the Company announced preliminary financial results for the second quarter of 2011 that showed that the Company was performing well below expectations and that AgFeed expected to post a loss of $17 million, as it added $5 million in allowances for its bad debt expenses. Additionally, on August 9, 2011, AgFeed disclosed to the U.S. Securities and Exchange Commission the true nature of its finances and the Company’s decision to withdraw the Registration Statement for its animal nutrition business. Since these revelations have emerged, shares of AgFeed have lost over 72% of their value.
If you purchased or otherwise acquired AgFeed stock during the Class Period and wish to serve as lead plaintiff, you must move the Court no later than 60 days from October 18, 2011. To discuss this action or have any questions concerning this notice or your rights or interests, please contact Gregory E. Del Gaizo, Esq. of Robbins Umeda LLP at 800-350-6003 or via the shareholder information form below.
* The firm name changed from Robbins Umeda LLP to Robbins Arroyo LLP on January 1, 2013.