Eaton Corporation (NYSE:ETN) Investor Files Class Action Lawsuit Over Alleged Securities Laws Violations
August 03, 2012 (Shareholders Foundation) -- An investor in shares of Eaton Corporation (NYSE:ETN) filed a lawsuit in the U.S. District Court for the Northern District of Ohio against Eaton Corporation over alleged violations of Federal Securities Laws in connection with certain financial statements that were allegedly false and misleading.
According to the complaint the plaintiff alleges on behalf of all purchasers of common stock of Eaton Corporation (NYSE:ETN) between August 2, 2009 and June 4, 2012, that Eaton Corporation, its President and Chief Executive Officer ("CEO"), and certain of its executives violated the Securities Exchange Act of 1934 by issuing between August 2, 2009 and June 4, 2012 allegedly false and misleading statements concerning its executives' involvement in an alleged scheme to improperly influence a Mississippi state court judge in litigation the Company had initiated against rival manufacturer Frisby Aerospace, Inc.( "Eaton-Frisby Litigation"). In 2002 six Eaton Corp employees left the company to join competitor Frisby Aerospace – now known as Triumph Actuation System. Eaton Corporation filed a lawsuit in which it was alleged that without authorization, these employees wrongfully took thousands of pages of documents containing trade secrets and proprietary information relating to hydraulic pumps, motors and other products developed by Eaton Corportion.
More specifically, the plaintiff alleges that certain Eaton Corporation managers allegedly knew, but repeatedly caused Eaton Corporation to deny, that Eaton Corporation had engaged Mississippi attorney Ed Peters, a politically connected go-between, to improperly influence Bobby DeLaughter, the presiding judge in the Eaton-Frisby Litigation. DeLaughter later recused himself from the Eaton case when he became embroiled in an unrelated lawsuit involving high-powered Mississippi attorney Richard Scruggs. DeLaughter was sentenced to 18 months in prison after admitting he lied to FBI agents about conversations he had with Peters in the Scruggs case. Judge Swan Yerger, who replaced Judge DeLaughter, subsequently dismissed Eaton's lawsuit against Frisby after deciding there was "clear and convincing" evidence that Eaton had hired Peters to secretly influence DeLaughter.
The plaintiff says that on May 31, 2012, Eaton's CEO and certain senior executives filed affidavits with the court, which admitted that Eaton had failed to turn over records showing that Eaton had improperly, and possibly illegally, attempted to influence Judge DeLaughter.
Eaton Corporation (NYSE:ETN) reported that its annual Revenue increased from $11.87 billion in 2009 to $16.04 billion in 2011 and its Net Income skyrocketed from $383 million in 2009 to $1.35 billion in 2011.
Shares of Eaton Corporation (NYSE:ETN) rose from $34.73 per share in Sept. 2011 to as high as $50.82 per share.