Cooper Tire Sued Over Plunge In Stock
TOLEDO, Ohio (AP) _ Cooper Tire & Rubber Co. allegedly duped investors by predicting strong profits in 1993 even though the company knew there was trouble ahead, according to a lawsuit filed by a shareholder.
The lawsuit filed Wednesday by John Cione in U.S. District Court in Toledo alleges the company provided false financial information about the status of Cooper’s business operations.
″They had the power and influence, and exercised such power and influence, to cause the company to engage in the unlawful conduct,″ the lawsuit says.
The lawsuit names the Findlay-based company; Ivan Gorr, chairman and chief executive officer; Patrick Rooney, president and principal operating officer; and J. Alec Reinhardt, executive vice president and chief financial officer. It asks for an unspecified amount of damages.
Gorr declined to comment Thursday on the lawsuit. Telephone messages left at Cooper headquarters for Reinhardt and Rooney were not immediately returned.
Telephone messages left for Dennis Murray Jr. and John Murray, two Sandusky lawyers representing Cione, also went unreturned.
The lawsuit did not say how many shares of Cooper stock Cione owns.
At issue is the period between Feb. 15, when Cooper announced record earnings, and Monday, when Cooper projected its second-quarter earnings would be lower than the same period in 1992.
Cooper’s stock fell by $7.75 after the announcement. It dropped an additional 75 cents the next two days to close Wednesday at $24.37 on the New York Stock Exchange. It rose 12 1/2 cents by late afternoon Thursday to $24.50.
The lawsuit asks that the case be certified into a class action on behalf of shareholders who purchased Cooper common stock between Feb. 15 and June 6.
The number of affected shareholders in a class-action suit would be in the thousands, according to the lawsuit. The suit claims the defendants continued to ″prolong the illusion of Cooper’s successful and profitable performance, to inflate and maintain the price of the common stock of the company.
On Feb. 15, Cooper reported its 1992 sales were $1.2 billion, producing profits of $43 million, or 52 cents a share.
In a letter to shareholders, Gorr and Rooney said ″the company’s year-end financial picture is excellent and continues the strength of the prior years. ... The market for replacement tires is solid with more vehicles and older vehicles on the road and with more use of cars and trucks for recreation and work.″
At Cooper’s annual shareholders meeting on May 4, Gorr reiterated that the company would have an excellent year.
But Cooper stunned investors on June 7 by announcing second-quarter earnings would fall below 1992 levels because of a soft demand for replacement tires, the lawsuit said.