NEW YORK (Reuters) - A shareholder of Arconic Inc on Thursday filed a lawsuit 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 United States tied to the fire that gutted the 24-story Grenfell Tower, in London’s North Kensington section.
Arconic’s share price fell 21 percent 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 $2.5 billion, according to Reuters data.
Arconic declined to comment on the lawsuit. Brave also named former Chief Executive Klaus Kleinfeld and current Chief Financial Officer Kenneth Giacobbe as defendants.
The complaint seeks to allow Arconic shareholders from Feb. 28 to June 26 to sue as a group.
Brave said shareholders were deceived by Arconic’s inadequate disclosures regarding the cladding panels, and 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 United States over unexpected stock price declines that they believe could have been averted.
Shares of Arconic closed Thursday up 26 cents at $24.45. They had closed at $21.84 on June 27.
The case is Brave v Arconic Inc et al, U.S. District Court, Southern District of New York, No. 17-05312.
Reporting by Jonathan Stempel in New York; editing by Jonathan Oatis