Basin Water in Rancho Cucamonga sued by shareholders
Class Action News
A San Diego law firm has launched a class-action suit against Rancho Cucamonga-based Basin Water Inc., alleging that it misled shareholders, causing the company's stock price to rise to inflated heights, leading to losses for investors when the stock later fell.
Basin designs and builds groundwater treatment systems.
The law firm, Coughlin Stoia Geller Rudman & Robbins LLP, says Basin and some of its officers and directors issued false and misleading statements about the company's financial results.
In particular, Coughlin Stoia alleges that Basin concealed facts from potential investors that included commitments to sell product at unprofitable prices and increased costs for waste disposal and salt purchasing.
The complaint also says company officials knew Basin had long-term contracts that would hurt profitability and lied about the status of those contracts.
In November, the stock fell 22 percent in one day after Basin announced that it would take a $4.7 million charge to reserve money for projected losses.
Basin said at the time it was the second charge the company had taken in less than a year related to so-called legacy projects.
Also, Basin said, improvements in its accounting practices allowed the company to determine the systems will continue to operate at a loss for some time.
The company said its management earlier this year established new business processes that ensure future contracts are properly priced and that Basin can pass along price increases to customers.
Late Friday, it was announced that a Baltimore law firm had started a class action against Basin as well.
Basin officials could not reached for comment Friday. Its shares closed at $9 Friday, up 89 cents.
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