|
In re International Rectifier Corporation Securities Litigation
(United States District Court
of the Central District of California)
Securities fraud class action on behalf of the class of persons and entities who purchased or
acquired the securities of International Rectifier Corp. (“International Rectifier” or the “Company”)
between April 29, 2005 and May 11, 2007.
On July 22, 2007, the Honorable John F. Walter appointed BLB&G client the General Retirement
System of the City of Detroit as Co-Lead Plaintiff and BLB&G as Co-Lead Counsel for the Class. Lead Plaintiffs filed
their consolidated complaint on January 14, 2008 and are presently responding to
defendants' motions for dismissal.
International Rectifier, headquartered in El Segundo, California, engages in the design, manufacture
and marketing of power management products. On April 9, 2007, International Rectifier shocked the
market when it informed investors that they should not rely upon the Company’s previously issued
financial statements for the quarters ended December 31, 2006, September 30, 2006, June 30, 2006,
March 31, 2006, December 31, 2005 and September 30, 2005, and for the year ended June 30, 2006.
According to the Company, outside counsel and investigators had conducted an investigation of
“accounting irregularities at a foreign subsidiary” that included “premature revenue recognition
of product sales.” As a result, International Rectifier’s stock fell 7%, or $2.83 per share,
from $38.80 per share to $35.97.
Then, on May 11, 2007, after the close of business, the Company further clarified the
nature and extent of the “accounting irregularities” it had discovered, and warned investors that,
in addition to the financial statements identified on April 9, the Company’s previously issued
financial statements for the quarters ended March 31, 2005 and June 30, 2005 and for the year ended
June 30, 2005, could no longer be relied upon. The Company stated that a foreign subsidiary had engaged
in “the shipment of products and the recording of sales with no obligation by customers to receive and
pay for the products” and included “routing certain product shipments to warehouses not on the Company’s
logistical systems.” International Rectifier stock fell an additional 3.5%, or $1.27 per share on this announcement.
On August 31, 2007 and on November 13, 2007, the Company revealed that the Audit Committee of the Company's Board of
Directors had determined the Company's financial statements for the periods ending between September 30, 2003 and
December 31, 2006 should not be relied upon. Among other things, the Company has disclosed (i) "The Company's Japan
subsidiary circumvented established controls and processes to record false or premature sales by creating fictitious
customer purchase orders..."; (ii) "[T]hat certain fictitious customer invoices were sold as part of the Japan
subsidiaries accounts receivables financing facilities... in an amount of up to $23 million per quarter in the
Company's fiscal years 2006 and 2007."; (iii) That for fiscal years 2003-2007, the Company had improperly characterized
normal operating costs as one-time, restructuring costs; and (iv) The Company had "identified issues associated with
its transfer pricing methodology and other tax issues for its fiscal years 2002-2007" and as a result in the quarter
ended September 30, 2007 the Company paid $74 million to the United States Internal Revenue Services and various
state agencies in back taxes and interest. The Company's former Chief Financial Officer Michael McGee, former
Executive Vice President for Global Sales, Robert Grant, and former Chief Executive Officer, Dr. Alex Lidow have all
left the Company in the wake of the investigation.
Lead Plaintiffs continue to investigate their claims against the Company for its
manipulation of publicly reported revenues. On January 14, 2008, Lead Plaintiffs filed their consolidated complaint in this action and are
presently responding to defendants' motions for dismissal.
Firm partner Blair A. Nicholas and associate Matt Siben are responsible for prosecuting this action.
|
