Vestas Wind Systems A/S
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Vestas Wind Systems A/S Securities Settlement
The lawsuit was settled for $5 million in cash. The following is a summary of the proceedings in this lawsuit: ‘Vestas is a Danish company, based in Ǻrhus, Denmark, and is one of the world largest developers, manufacturers, sellers, and maintainers of wind turbines and wind-power systems. Vestas securities trade on the NASDAQ OMX (in Denmark), and its ADRs and common stock also trade domestically in the United States. In March 2011, several putative class actions were filed by certain purchasers of Vestas securities alleging violations of the federal securities laws. On June 7, 2011, the Court appointed the Lead Plaintiff and Lead Counsel and also appointed the law firm of Stoll Stoll Berne Lokting & Shlacter P.C. as Liaison Counsel. On February 19, 2013, Lead Plaintiff filed an amended complaint, which was later supplemented by a Second Amended Complaint (the Complaint). The Complaint asserts claims under the Securities Exchange Act of 1934 and contends that Vestas made false statements and omitted material facts about its compliance with revenue-recognition rules and the impact of those rules on the company reported revenue and earnings. The principal claim is that Vestas did not properly account for changes in the interpretation of international accounting standards that allegedly prohibited Vestas from recognizing revenue and earnings from certain types of contracts until the projects had been completed and all risk had been transferred to the customers. The Complaint claims that Vestas knew of the new accounting interpretation (IFRIC 15) before and during the Class Period, but ignored it and misleadingly told investors until 2010 that IFRIC 15 was not expected to have a material impact on Vestas financial reporting. The Complaint also makes allegations about inventory and production problems, including that Vestas accumulated and did not properly account for obsolete or otherwise unusable inventory and that it delivered defective products to customers and lacked appropriate testing and commissioning procedures. The Complaint contends that these alleged misstatements and omissions inflated the price of Vestas securities. 17. Lead Plaintiff alleges that Vestas made three disclosures during the Class Period revealing its purported failure to comply with IFRIC 15. First, on August 18, 2010, Vestas presented its second-quarter results and downgraded its 2010 financial forecast for revenues and earnings because revenue associated with unfinished wind-turbine projects could not be recognized until future periods. Second, on October 26, 2010, Vestas announced that it was considering whether to change accounting policies to comply with IFRIC 15. Third, on November 22, 2010, Vestas announced that its implementation of IFRIC 15 required restating the company financial statements for the previous five years. Vestas stock price declined after each such announcement. Lead Plaintiff further alleges that, between November 2010 and February 2012, Vestas continued to issue unrealistic revenue forecasts even after announcing the new revenue-recognition policy. For example, on October 30, 2011, Vestas announced that it was reducing the outlook for 2011 revenue because of the slow commissioning of a new generator factory in Germany. On February 7, 2012, after the Board had been briefed on the conditions that had led to the 2011 profit warning, Vestas announced the resignation of its Chief Financial Officer and Deputy Chief Executive Officer. On February 8, 2012, Vestas released its annual report for 2011, announcing even lower results and revenue than had been anticipated in the earlier profit warnings because of cost overruns, production delays, and write-downs. While Lead Plaintiff was preparing its complaints, the parties engaged in extensive discussions with the assistance of two mediators to see whether the Lawsuit could be settled without further expensive litigation. The many months of discussions produced the proposed Settlement described in this Notice.’