The Klein Law Firm announces that a class action complaint has been filed on behalf of shareholders of A. O. Smith Corporation (NYSE: AOS) who purchased shares between July 26, 2016 and May 16, 2019. The action, which was filed in the United States District Court for the Eastern District of Wisconsin, alleges that the Company violated federal securities laws.
In particular, the A. O. Smith lawsuit alleges that (a) A.O. Smith had undisclosed business connections and entanglements with UTP through which it funneled up to 75% of its China product sales; (b) A.O. Smith had used UTP to engage in channel stuffing by artificially inflating inventories purportedly sold through distributors that were not based on consumer demand, thereby approximately doubling the normal level of inventory at such distributors; (c) A.O. Smith had used its UTP relationship to artificially inflate the sales figures it reported to investors by as much as 8% and to conceal worsening sales trends that the Company was experiencing in China; (d) A.O. Smith’s sales growth had been primarily in lower margin products as its higher priced products were being undercut by competition in “second-tier” Chinese cities, causing the Company to experience significant margin pressures; (e) A.O. Smith had increased its cash reserves in China to over $530 million in furtherance of its channel stuffing and sales manipulation scheme, encumbering the Company’s ability to repatriate the cash or use it for capital expenditures; and (f) as a result of (a)-(e) above, A.O. Smith’s business, operations, and prospects were significantly worse than publicly represented and the Company was poised for sales and earnings declines in China, its most important international market.
Shareholders have until July 29, 2019 to petition the court for lead plaintiff status. Your ability to share in any recovery does not require that you serve as lead plaintiff. You may choose to be an absent class member.
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