ECOtality, Inc. Sued by Investor
Robbins Arroyo LLP announce that an investor of ECOtality, Inc. (NASDAQ: ECTY) (“ECOtality”) has filed a complaint in the U.S. District Court for the Northern District of California. 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.
ECOtality Accused of Making False and Misleading Statements
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.
ECOtality Stock Price Drops on News that the Company Hired a Restructuring Adviser
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.
If you invested in ECOtality and would like to discuss your shareholder rights, please contact attorney Darnell R. Donahue at (800) 350-6003 or you can complete the form below and we will contact you directly.