SAN DIEGO & MILWAUKEE--(BUSINESS WIRE)--
Shareholder rights law firm Robbins Arroyo LLP announces that an investor of A.O. Smith Corporation (AOS) has filed a shareholder derivative complaint against the company's officers and directors for breaches of fiduciary duties, waste of corporate assets, unjust enrichment, and violations of the Securities Exchange Act of 1934. A.O. Smith manufactures and markets water heaters and boilers.
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A.O. Smith Corporation (AOS) Accused of Misleading Investors
According to the complaint, A.O. Smith has operated in China for over 20 years. In 2018, A.O. Smith boasted "record" sales of $3.2 billion of which China sales exceeded $1 billion. However, in April 2019, A.O. Smith reported disappointing financial results, primarily due to plummeting Chinese sales. Quarterly earnings for the related segment fell over 65% year-over-year. On this news, A.O. Smith's stock fell over 5%. A.O. Smith's directors played it off as a temporary weakness related to macro events. Then in May 2019, J Capital Research USA LLC issued a scathing report on A.O. Smith's China operations and its relationship with Jiangsu UTP Supply Chain ("UTP"), an undisclosed partner in China. The report charged A.O. Smith with inflating its sales and earnings figures, and revealed that UTP may be responsible for as much as 75% of A.O. Smith's China sales. In response, A.O. Smith published a press release, which essentially admitted that the company had substantial interests in China with UTP and failed to stabilize its declining stock price. A.O. Smith's stock closed at $43.26 per share on May 20, 2019, 36% below the class period high of $68 per share, and has yet to recover.
A.O. Smith Corporation (AOS) Shareholders Have Legal Options
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