Robbins Arroyo LLP: Eaton Corporation plc (ETN) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against Eaton Corporation plc (NYSE: ETN) in the U.S. District Court for the Southern District of New York. The complaint is brought on behalf of all purchasers of Eaton securities between November 13, 2013 and July 28, 2014, for alleged violations of the Securities Exchange Act of 1934 by Eaton’s officers and directors. Eaton operates as a power management company worldwide.
Eaton Accused of Misrepresenting the Effects of Its Merger
According to the complaint, on May 21, 2012, Eaton acquired Cooper Industries plc (“Cooper”), an Ireland-based product manufacturer, for $11.8 billion. Under the agreement, Eaton would be re-incorporated in Ireland and re-domicile its headquarters to Ireland—a change that purportedly allowed Eaton to lower its corporate tax rate. In response to questions regarding the effect of the merger on the company’s ability to spin-off its vehicle business, Eaton executives allegedly falsely assured investors of the company’s feasibility of divesting its automobile-part manufacturing business on a tax-free basis. Eaton held several investor conference calls stating that nothing would prevent the company from making changes to its portfolio, touting the company’s favorable tax position, and elaborating on the company’s opportunities to expand in other countries.
The complaint alleges that these statements were misleading because Eaton officials failed to disclose that the company could not feasibly execute a tax-free spin-off of its vehicle business. On July 29, 2014, Eaton’s Chief Executive Officer finally informed investors that Eaton could not feasibly divest its vehicle business until late 2017 due to tax law restrictions related to the merger with Cooper. He further revealed that Eaton had known of the prohibition for years, stating, “It’s not new knowledge. We’ve been aware of this all along.” On this news, Eaton stock fell over 8% to close at $70.51 per share on July 29, 2014.
Eaton Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.Send This Post