Lawsuit: Kraton Failed to Warn Investors of Cariflex Product’s Negative Impact on Earnings

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A proposed class action has been filed against Kraton Corporation alleging the company failed to disclose to investors that issues with its Cariflex product were negatively impacting earnings. The lawsuit, which also names Kraton’s CEO and CFO as defendants, describes the polymer manufacturing company’s recent transition to selling Cariflex, a polyisoprene product, out of its Brazilian facility. The defendants allegedly assured investors in an October 2017 conference call that the transition was running smoothly and that the product was already available to customers.

The suit argues that the defendants were already aware, however, that several customers had rejected the product due to “processing issues,” which would have a negative impact on Kraton’s earnings. Eventually, the truth was revealed when the company published negative fourth-quarter financial results, the complaint alleges, causing stock prices to drop over 15 percent and damaging investors.