trending Market Intelligence /marketintelligence/en/news-insights/trending/dq_9ghhol7jeru5dshllaq2 content esgSubNav
In This List

First Solar suffers legal setback in securities fraud case

Podcast

Next in Tech | Episode 49: Carbon reduction in cloud

Blog

Using ESG Analysis to Support a Sustainable Future

Research

US utility commissioners: Who they are and how they impact regulation

Blog

Q&A: Datacenters: Energy Hogs or Sustainability Helpers?


First Solar suffers legal setback in securities fraud case

A 2012 shareholder lawsuit accusing First Solar Inc. of securities fraud for allegedly concealing defects in its thin film solar panels, misrepresenting the scope of the problem and making false financial statements moved one step closer to resolution after the U.S. Court of Appeals for the 9th Circuit in a Jan. 31 opinion settled a legal debate over "loss causation" in the plaintiffs' favor. The decision allows the suit to move forward.

Uncertainty over how to gauge the economic losses plaintiffs sustained over a four-year period between 2008 and 2012 — when First Solar's stock plunged from almost $300 per share to less than $50 per share sidetracked the case when the U.S District Court for the District of Arizona in August 2015 flagged the issue for the appeals court to clarify. In its order, the district court in large part denied First Solar's motion for summary judgement on all claims and said the plaintiffs, led by two U.K.-based pension systems, produced several claims that could be tried. The district court judge, however, stayed the action pending 9th Circuit review.

In its opinion, the three-judge appeals panel in San Francisco agreed with the district court's interpretation that the plaintiffs "can satisfy loss causation by showing that the defendant misrepresented or omitted the very facts that were a substantial factor in causing the plaintiff's economic loss." The judges rejected First Solar's argument that securities fraud plaintiffs "can recover only if the market learns of the defendants' fraudulent practices." The 9th Circuit also affirmed the district court's determination that, if accepted by the jury, plaintiffs' evidence "could satisfy the proximate loss causation test" for five of six alleged stock price declines outlined in their complaint.

Attorneys for the plaintiffs celebrated the ruling as a win for First Solar investors and expect the case to resume at the Arizona district court. First Solar declined to comment on the appellate court opinion. In an October 2017 filing with the SEC, the company said it was "not in a position to assess whether any loss or adverse effect on our financial condition is probable or remote or to estimate the range of potential loss, if any."