Multiple class action lawsuits filed against Chemours , executives
On March 25, just days after the audit, a plaintiff named Todd Masel filed a lawsuit in Delaware District Court against Chemours, Mark Newman, and former Chemours CFOs Jonathan Lock and Sameer Ralhan.
Neither Masel’s nor Chemours’ attorneys have responded to queries. But according to the lawsuit, the company’s former top executives had potentially caused Masel, a Chemours shareholder, damages by allowing inaccurate financial information to be reported.
In the suit, Masel’s lawyers cited a Wall Street Journal story to show that Chemours stock had tumbled 31% on Feb. 29, the day that the financial irregularities and audit were first announced.
The lawsuit also asserts there is sufficient cause to dig deeper for financial issues that may lead to discovery of greater wrongdoing, and enumeration of damages to Masel and other shareholders.
Those shareholders ostensibly include Robert H. Taylor, Jr. Taylor filed a similar class action suit against Chemours in March.
Both lawsuits were linked by a federal judge on April 4 and placed on hold, anticipating even more class action lawsuits and plaintiffs At least a dozen law firms from Delaware to Louisiana have announced their intentions to sue, provided they find a plaintiff who can show damages.
“The Company is aware of additional efforts by private law firms to solicit clients in regard to potential securities class action or derivative litigation,” reads Chemours’ annual report. “These matters could result in us incurring additional costs and liabilities, which may be material to our results of operations, financial condition, and cash flows.”
Class action lawsuits are par for the course, says legal expert
Class action lawsuits are pretty much routine in cases where financial irregularities are alleged against large public corporations, Elson said.
“Any time there’s a problem you’re gonna see a class action lawsuit,” Elson said. “But given the severity of the accusation, which is pretty serious, the question is ultimately who did what, when and where. And you’re not going to find that out until after an investigation.”
Any such investigation will likely be lengthy, Elson said, and is likely to lead to a court settlement. The size of any settlement is as likely to hinge on the size of a corporation’s insurance policy as on the amount of damages, he said.
Before any case will proceed, according to an April 4 court order, the Delaware District Court will declare a lead plaintiff, once various law firms have filed their respective class action claims. The lawsuits would then be folded into a single amended class action claim.
But if the lawsuits were expected, Elson said, what’s far less expected are allegations of financial malfeasance for a successor company to DuPont.
“DuPont was a pretty buttoned-up place,” he said. “And Chemours was a spin-off the oldest part of DuPont’s operations. They were very tight in their corporate structure and oversight.”
As a longtime legal observer and expert in corporate governance, Elson said the news has taken him by surprise.
“You would not have expected this,” he said. “It’s a mess. It’s a real mess.”
Reach Matthew Korfhage at mkorfhage@gannett.com.