City of Pontiac General Employees’ Retirement System v. First Solar, Inc.

Court: United States District Court for the District of Arizona
Case Number: 2:22-cv-0036-PHX-MTL
Class Period: 02/22/2019 - 02/20/2020
Case Leaders: Hannah Ross, Avi Josefson, Scott R. Foglietta

On January 7, 2022, Bernstein Litowitz Berger & Grossmann LLP (“BLB&G”) filed a class action lawsuit pursuant to Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 in the U.S. District Court for the District of Arizona against First Solar, Inc. (“First Solar” or the “Company”) and certain of its senior executives (collectively, “Defendants”) on behalf of investors in First Solar common stock between February 22, 2019 and February 20, 2020, inclusive (the “Class Period”).

On April 25, 2022, the Honorable Michael T. Liburdi appointed Palm Harbor Special Fire Control & Rescue District Firefighters’ Pension Plan and Greater Pennsylvania Carpenters’ Pension Fund as Lead Plaintiffs. On June 23, 2022, Lead Plaintiffs filed the Amended Complaint. To view the complaint, see the Case Documents section of this page.

First Solar's Alleged Fraud

Headquartered in Tempe, Arizona, First Solar manufactures solar energy panels and power systems. First Solar’s business is comprised of multiple segments including, among others, the Modules Segment, which manufactures and sells solar panel units, and the Systems Segment, which buys land, develops sites, installs solar panel units, and then sells the entire site to a buyer.

The Amended Complaint alleges that, throughout the Class Period, Defendants made repeated misrepresentations to investors regarding the Module Segment’s development of its newest “Series 6” solar module, including the cost efficiencies it would achieve with that module. Unbeknownst to the market, however, the Series 6 modules had multiple significant problems, including manufacturing and performance defects, that negatively impacted the Series 6 modules’ purported cost benefits.

The Amended Complaint further alleges that, throughout the Class Period, Defendants made repeated misrepresentations to investors about the Systems Segment’s Project Development business, including concerning the strength of the Company’s Systems pipeline. In truth, and contrary to Defendants’ misrepresentations, the pipeline for the Project Development business had all but dried up before and during the Class Period, and the Systems Segment had lost 80% of its market share. Moreover, Defendants falsely represented to investors that the Company was making big investments in and had long-term plans for the Project Development business. In reality, however, and undisclosed to investors, Defendants had already begun quietly dismantling the Project Development unit and exploring options to divest the business in the first half of 2019.

As a result of Defendants’ misrepresentations, First Solar common stock traded at artificially inflated prices during the Class Period.

The truth about First Solar’s difficulties transitioning to the Series 6 solar module was revealed through a series of disclosures. First, on January 15, 2020, Barclays reported that First Solar had seemingly been priced-out of the U.S. solar market, and that the Company had obfuscated its rapidly declining market share through misleading financial reporting. On February 6, 2020, Barclays further reported that First Solar’s aggressive attempts to win back market share were leading to lower Project Development contract prices and cutting into the Company’s margins. Then, on February 20, 2020, First Solar announced that it was exploring a sale of its Project Development business. Further, First Solar acknowledged that it was experiencing “challenges with regard to certain aspects of the overall cost per watt” and that the Company would no longer be disclosing a discrete cost per watt for its Series 6 units. As a result of these disclosures, First Solar’s share price declined precipitously.

Defendants are due to file their motion to dismiss the Amended Complaint on August 22, 2022, and Lead Plaintiffs are due to file their opposition to Defendants’ motion to dismiss on October 21, 2022. Defendants’ reply in further support of their motion to dismiss is due November 21, 2022.