AMSC alleged on April 5 that its largest customer, Sinovel, had refused to accept contracted shipments because of the slow-down in China’s market. The shipments consisted of core electrical components and spare parts for 1.5MW and 3MW wind turbines.
The US company also disclosed it was reviewing its recognition of some $56 million of unpaid shipments in 2010 as revenue and that it expected to post a loss for the fourth quarter and reduced revenues for the 2010 financial year when it unveils its results in May.
AMSC’s stock plunged 42% in pre-market trading on April 6. Sinovel accounts for 75% of AMSC’s revenue.
The law firms are seeking purchasers of AMSC stock to join the class action. A class action allows a large number of people with a common interest to sue as a group.
Specifically, the law firms allege that AMSC wrongly provided Sinovel with contracted shipments in excess of its needs; did not disclose that Sinovel had already not paid for some shipments; continued to provide Sinovel with contracted shipments; improperly recognised revenue on the disputed shipments; and over-stated its revenues, among other actions.
An AMSC spokesman did not respond to requests for comment.
Law firms that have filed or are readying suits include: Levi & Korinsky; Glancy Binkow & Goldberg LLP; Federman & Sherwood; Hagens Berman LLP; and Izard Nobel.