A shareholder of Arconic has filed a lawsuit in the US accusing the company of defrauding shareholders over its supply of cladding panels used at Grenfell Tower, the London high-rise where at least 80 people died in a fire last month.
In his proposed class- action complaint, Michael Brave is seeking to recoup “significant” shareholder losses stemming from Arconic’s failure prior to the June 14 blaze to properly disclose its use of “highly flammable” Reynobond PE panels. The shareholder lawsuit filed in the federal court in Manhattan, where Arconic is based, may be the first in the US tied to the fire that gutted the 24-story Grenfell Tower, in London’s North Kensington district.
Arconic’s share price fell 21% between June 14 and June 27, the day after the company once known as Alcoa said it would stop selling the panels for use in high-rises. That decline reduced Arconic’s market value by more than $2.5bn (€2.1bn). Arconic declined to comment on the lawsuit.
Brave also named former chief executive Klaus Kleinfeld and chief financial officer Kenneth Giacobbe as defendants.
The complaint seeks to allow Arconic shareholders from February 28 to June 26 to sue as a group. Brave said shareholders were deceived by Arconic’s inadequate disclosures regarding the cladding panels.
He claims that their use significantly increased the risk of property damage, injury or death in buildings containing them.
He said Arconic’s public statements were “materially false and misleading at all relevant times,” and that Kleinfeld and Giacobbe should also be held liable for their contents.
It is common for shareholders to sue companies in the US over unexpected stock price declines that they believe could have been averted.
Shares of Arconic were trading yesterday at one stage at $24.40, slightly lower on the day.
Arconic, formerly Alcoa, is engaged in lightweight metals engineering and manufacturing. The company operates through three segments: global rolled products, engineered products and solutions, and transportation and construction products.
The company’s multi- material products, which include aluminum, titanium and nickel, are used around the world in aerospace, car, commercial transportation, packaging, building and construction, oil and gas, defence, consumer electronics and industrial applications.
At the end of last year, it had operations in 19 countries.
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