Stockholders v AGCO Corporation
AGCO Corporation Stockholders File Action Alleging Corporate Misrepresentations
Several class actions have been filed against agricultural manufacturer AGCO Corporation (NYSE: AG) and certain of its officers and directors by stockholders who purchased the company's common stock between February 6, 2003, and February 5, 2004. The actions claim that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock.
Also named as defendants in the action are Robert J. Ratliff and Andrew H. Beck. During the applicable period, the defendants issued a series of misrepresentations to the market concerning the company's financial results. The action alleges that the defendants' statements were misleading because they failed to disclose or misrepresented the following adverse facts, among others: (1) that the company improperly recorded revenue on its 'bill and hold' transactions where risk did not pass to the customer; (2) that it recklessly disregarded its own policies regarding recognizing revenue; and (3) as a result of the foregoing, AGCO's net income and earnings per share published during the period were not in accordance with Generally Accepted Accounting Principles.
On February 5, 2004, AGCO shocked the market when it issued a press release announcing its fourth quarter and year-end results for fiscal year 2003, the period ended December 31, 2003. At that time, the company also disclosed that it had received an informal inquiry from the SEC asking for its policies and related information with regard to its accounting for revenue recognition (particularly bill and hold transactions), sales and sales returns and allowances, plant and facility closing costs and reserves, and personal use of corporate aircraft. Upon this news, shares of the company's stock fell approximately 16%, or $3.10 per share, to close at $16.25 per share on extremely high trading volume.
