Arconic Named in Class Action Over Alleged Securities Law Violations

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A proposed class action has been filed in New York against lightweight metals engineering and manufacturing company Arconic, Inc. and its former CEO in the wake of the June 14 Grenfell Tower fire in West London that resulted in roughly 80 deaths. Filed by a shareholder on behalf of those who purchased the defendant’s stock between November 4, 2013 and June 26, 2017, the lawsuit centers around Arconic’s aluminum Reynobond panels that are combined with insulation to form cladding used on the exterior of residential and office towers. 

The case details that Reynobond panels come with either a combustible Polyethylene core or a more expensive fire-resistant core. According to the complaint, Arconic sales personnel knowingly marketed and sold the former, a cheaper product, for inappropriate uses, including for use on residential high rises. The plaintiff alleges Arconic, despite the combustibility of its Polyethylene panels (and laws outlawing their installing on buildings in the US and Europe), sold millions of dollars’ worth of its cheaper Reynobond panels for use in projects the company knew “were not appropriate for the product and which presented a fire hazard.”

Noting that Aronic’s sales reportedly took a “tremendous” blow in the most recent global financial crisis, the lawsuit claims the company’s sales personnel, under “intense pressure to make every sale possible,” left Arnoic vulnerable to massive civil, regulatory and criminal liability by selling hundreds of millions of dollars of dangerous products. Moreover, Arconic’s sales tactics were hidden from the investment community, which led to the company’s stock being traded at artificially inflated prices, the case claims.

After a flurry of reports were published by major global news outlets after the fire, Arconic’s stock reportedly plummeted amid unusually high trading volume.