JA Solar (JASO) In Legal Hot Water Over Lehman Bros Note

Yesterday it was announced that Holzer & Fistel LLC was investigating possible federal securities violations of JA Solar (JASO) due to a failure to disclose in a timely manner that it had purchased a $100 million 3 month note from Lehman Bros. at a time when LEH was under severe financial distress. 

After the bell today, Coughlin Stoia Geller Rudman & Robbins LLP announced a class action lawsuit in New York on behalf of purchasers of the ADS shares of JASO during the period of Aug 12 2008 – Nov 12 2008.

According to the complaint, defendants failed to disclose: (i) that JA Solar had made a material, highly speculative investment in a subsidiary of Lehman Brothers, an entity that was then undergoing a credit crisis and under significant financial distress; (ii) that the value of JA Solar’s investment in the Lehman note had diminished considerably; and (iii) that, as a result of the foregoing, defendants’ positive statements concerning JA Solar’s financial performance, outlook and earnings guidance were materially false and misleading and without reasonable basis.

JA Solar didn’t disclose the note and write off until Nov 12th.  The stock gapped down that day and closed near the lows at 2.38, eventually hitting an all time low of 1.55 about a week later.  Since then, the stock has more than doubled and currently trades at 3.61/share.

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