A securities class action lawsuit has been filed against Trinity Industries Inc. alleging that it altered the design of its ET-Plus guardrail end terminal without telling the Federal Highway Administration (FHWA), and made false and misleading statements to its investors.
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Class Action Allegations
The class action, entered in U.S. District Court, Northern District of Texas, was filed on behalf of all persons or entities who purchased Trinity securities between Feb. 16, 2012 and Apr. 21, 2015. The complaint seeks to recover damages against Trinity for alleged violations of the Securities Exchange Act of 1934.
According to the lawsuit, Trinity made false and/or misleading statements and/or failed to disclose that: (1) it altered certain dimensions of the ET-Plus guardrail end terminal in 2005 without telling the FHWA; and (2) as a result of the foregoing, Trinity's public statements were materially false and misleading at all relevant times.
Related Article: Intentional Tort & Negligence (Major Differences)
Virginia Sues Over Guardrail Design Change
On Oct. 14, 2014, the New York Times published an article [1] reporting that the State of Virginia threatened to remove Trinity guardrails unless the company conducted additional safety tests. As a result, shares of Trinity Industries fell $0.53, or over 1.5%, to close at $32.93 the next day.
Whistleblower Lawsuit
On Oct. 20, 2014, a Texas jury found that Trinity deliberately withheld information about design changes it made to its ET-Plus end terminal which made it more likely to malfunction in the event of a crash, ruling the company defrauded the U.S. government by $175 million.
The verdict was the result of a whistleblower lawsuit that alleged Trinity turned the ET-Plus into a lethal highway hazard in an effort to cut costs, illegally passing the device off as eligible for federal funding. As a result of this news, Trinity shares fell $4.42, or over 12.3%, to close at $31.42 on Oct. 20, 2014.
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