The action alleges that during the applicable period, the individual defendants engaged in the scheme to conceal ALSTOM's problems growing its marine segment in order to prevent the decline in the price of ALSTOM securities to: (i) protect and enhance their executive positions and substantial compensation; (ii) raise €387 million in a share offering on June 19, 2001, as well as €630 million in a rights offering on June 4, 2002; and (iii) enhance the value of their personal ALSTOM securities holdings and options.

It was important to ALSTOM to be perceived favorably and to minimize the risks associated with its liquidity so that it could raise the necessary financing to fund its business. ALSTOM's bank borrowings increased from €839 million at March 31, 1999, to €2.7 billion at March 31, 2000, to €4.5 billion at March 31, 2001. Thus, the defendants concealed the off-balance-sheet risk associated with guarantees on debt incurred by customers, including Renaissance Cruises, Inc., making purchases from ALSTOM's fastest growing segment.

The true facts, which were allegedly known to the defendants but concealed from shareholders were as follows: (1) ALSTOM’s first half financial results for FY 2000 were grossly overstated, as they overstated the company's receivables and income associated with its sales of GT24B and GT26B turbines. Of nearly 80 of these turbines which had been sold, only 25 allegedly worked; (2) the disastrous problems associated with the turbines was causing customers to back out of their prior turbine orders—the well-publicized "backlog" for turbines was grossly misrepresented; (3) the company had failed to timely and adequately account for the liabilities associated with the its gas turbines –customers requesting compensation payment rather than a correction of the turbines– and transport problems totaling in excess of €1 billion and plunging ALSTOM into a loss of €1.4 billion in FY 2003.

As well, the defendants concealed that: (4) ALSTOM’s new compressor, which had been tested on the European grid, required substantial modification and testing prior to being used on the U.S. grid causing huge expenses in the business; (5) the company was hemorrhaging cash and would need to divest itself of its higher margin businesses, causing material earnings dilution and further rendering the Company's projections for its revenue and income to be false; (6) the company's "underfunding" of its pension liabilities was materially understated in excess of €500 million; (7) the company failed to timely disclose its liabilities associated with vendor financing and Renaissance cruise ships; (8) until November 2002, the company concealed its exposure to 60 separate asbestos lawsuits involving 6,500 plaintiffs with €60 million in potential liabilities; (9) the company's asset disposal program was well behind schedule and that its projected goal of raising proceeds of €1.4 billion by March 2003 was a fallacy; (10) even the Company's November 2002 revised guidance associated with restructuring the ALSTOM transport business was grossly understated; (11) the company had materially understated its losses associated with a rail car contract by in excess of €51 million; (12) the company had concealed the fact that it had made written guarantees to banks that had loaned money to cruise lines so they could purchase ships from ALSTOM and thereby inflate its revenue via ship sales; and (13) the company had actually understated the Company's net debt by €2 billion via its vendor financing scheme.