A workers union sued a major technology company on April 1 over allegations it violated the Securities Exchange Act while trying to sell part of its business.
The International Association of Heat and Frost Insulators and Asbestos Workers filed the lawsuit on April 1 against International Business Machines (IBM) Corporation alleging the company knew part of the business it was trying to sell was virtually worthless.
The lawsuit said IBM was attempting to sell part of its hardware business that designs and produces microchips for approximately $2.4 billion. The business included property, a plant and equipment assets. Investors, including the union, allegedly didn't know that IBM struggled to find a buyer and that the business had lost approximately $700 million in 2013.
The lawsuit alleged IBM knew that the microelectronics business was worthless, but misrepresented the value of the microelectronics business and artificially inflated the company's results to stockholders.
Investors didn't find out about the $700 million loss until IBM announced in October that it planned to transfer the microelectronics business to GlobalFoundries Incorporated along with a $1.5 billion incentive payment.
The union is seeking class status for those who held IBM stock between Jan. 22, 2014 and Oct. 17, 2014. The plaintiffs are also seeking damages, interest and court costs in the lawsuit.
The union is represented by Christopher J. Keller, Michael W. Stocker and Rachel A. Avan, of Labaton Sucharow, LLP in New York City.
United States District Court Southern District of New York case number 7:15-cv-02492.