U.S. Steel faces a class action lawsuit after its stock plunged by 26 percent when it reported a first-quarter loss of $180 million that stunned analysts and investors.
New York-based Rosen Law Firm, Pennsylvania-based RM LAW, Los Angeles-based Lundin Law and several other law firms announced the lawsuit on behalf of investors who lost money when the Pittsburgh-based steelmaker posted the unexpected first-quarter loss, leading to a huge drop in the stock price and the retirement of then CEO Mario Longhi at a time when the rest of the steel industry was rebounding.
The steelmaker, one of Northwest Indiana's largest employers, declined to comment on the case.
"We do not comment on pending litigation," U.S. Steel Corp. spokeswoman Meghan Cox said.
Rosen Law Firm said in a news release that U.S. Steel "issued false and misleading statements," failing to disclose that while the steelmaker was implementing its Carnegie Way cost-cutting program in recent years, it failed to make investments needed to profit when market conditions improved and that its failure to invest in maintenance meant it had higher production costs than competitors.
"Defendants were forestalling expensive capital equipment upgrades in order to boost U.S. Steel’s short-term financial results at the expense of long-term financial performance, leaving U.S. Steel in need of accelerated, costly equipment upgrades that would leave U.S. Steel years away from generating improved financial performance," Rosen Law Firm said in the news release.
U.S. Steel pulled in a $261 million profit in the second quarter, but its stock price remains down from a yearly high of $41.57 per share in February. U.S. Steel stock closed Tuesday at $26.63.