First Solar Inc. on Jan. 6 said it agreed to pay $350 million to settle a class-action lawsuit that accused the solar panel maker of securities fraud for allegedly covering up equipment defects that led to millions of dollars in warranty claims against the company.
The complaint was filed in 2012 in the U.S. District Court for the District of Arizona on behalf of investors who bought First Solar shares before the company disclosed declining sales and a $164 million charge during the fourth quarter of 2011 to replace faulty solar panels. The company's stock price fell 11% on the day the financial information was released in February 2012.
First Solar said the settlement does not call for the company to admit liability, wrongdoing or responsibility.
"While we are confident in the facts and the merits of our position, we believe it is prudent to end this protracted and uncertain class action litigation process, and focus on driving the business forward," First Solar CEO Mark Widmar said in a news release.
A lawyer for the plaintiff did not immediately respond to a request for comment Jan. 6.
The time period covered by the lawsuit spanned a global recession, a retraction of government support for renewable energy in Europe — and the company's subsequent shift away from those markets — and trade disputes that led to a negotiated settlement between China and the European Union and tariffs levied on Chinese solar manufacturers by the U.S. Department of Commerce.
"Unsurprisingly, these developments were accompanied by steep declines in stock prices throughout the industry," First Solar said in a court filing. "This lawsuit is an attempt to recover some of that decline through unsupported allegations of securities fraud."
A trial in the case was scheduled to begin Jan. 7, according to a Form 10-Q report that First Solar filed with the U.S. SEC in October 2019.
"This lawsuit asserts claims that, if resolved against us, could give rise to substantial damages, and an unfavorable outcome or settlement may result in a significant monetary judgment or award against us or a significant monetary payment by us, and could have a material adverse effect on our business, financial condition, and results of operations," the company said in the filing. "Even if this lawsuit is not resolved against us, the costs of defending the lawsuit and of any settlement may be significant."
First Solar said it expects to include the cost of the settlement in its 2019 financial results.
The settlement does not resolve a related lawsuit in which the company is accused of misleading investors.
First Solar shares were down 3.17% at $55.21 at 12:57 p.m. ET on Jan. 6.