Following Canadian Solar's announcement this week that the U.S. Securities and Exchange Commission (SEC) has issued a subpoena and that revisions to fourth-quarter 2009 earnings figures may take place, two law firms have announced investigations into the company's practices.
Hagens Berman Sobol Shapiro (HBSS), one of the firms conducting an investigation, says the news of the SEC investigation and Canadian Solar's delay in reporting its earnings prompted a decline in Canadian Solar stock during after-hours trading on Tuesday. According to the law firm, the module manufacturer may have misrepresented financial information to shareholders.
HBSS says it is investigating the tactics used by Canadian Solar and whether the company fairly disclosed risks to potential investors. HBSS is also concerned about what is instigating the sales decline and why customers returned previously purchased goods, which led to the earnings revisions.
Similarly, The Rosen Law Firm PA has announced that it is investigating potential securities fraud at Canadian Solar, claiming the module manufacturer may have issued ‘materially inaccurate’ financial statements to the investing public between March 3 and June 1.
Specifically, in addition to citing concern regarding returned products, The Rosen Law Firm notes that in its original earnings report, Canadian Solar may have recorded revenue from sales for which it had not been paid. The firm is preparing a class-action lawsuit on behalf of Canadian Solar investors.