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Pension Funds Sue Navistar Over Engine Disclosures
At least two pension funds are separately suing Navistar International Corp., alleging that its executives misled investors about the company's problems developing a diesel engine to meet new federal emissions regulations.
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At least two pension funds are separately suing Navistar International Corp., alleging that its executives misled investors about the company's problems developing a diesel engine to meet new federal emissions regulations.
The lawsuits filed in federal court in Chicago seek class-action status on behalf of investors who bought Navistar stock in 2010-2012.
The Lisle, Ill.-based company gambled on meeting the 2010 standards by developing a new heavy-duty diesel engine technology that it said would be cheaper than the system its competitors had chosen. Plaintiffs complain that former CEO Daniel Ustian and current CFO Andrew Cederoth repeatedly said Navistar's new technology was ready for federal certification.
When the company admitted last July that the engine failed to meet regulatory standards, its shares dropped 15% in a day. The U.S. Securities and Exchange Commission disclosed shortly after that it was investigating Navistar's accounting and disclosure practices. Ustian resigned In August.
The company was forced to pay hefty fines for the non-compliant engines it sold. Navistar has scrapped its $700 million engine program and agreed to buy engines and components from rival Cummins Inc.
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