This securities fraud class action lawsuit charges LG.Philips and certain of its officers and directors with violations of the Securities Exchange Act of 1934.
LG.Philips engages in the manufacture and supply of thin film transistor liquid crystal displays ("LCD") to original equipment manufacturers and multinational corporations. It sells its products primarily in the United States, Korea, Asia, and Europe.
The class action complaint alleges that during the Class Period, LG.Philips made positive statements concerning the Company's LCD business while, unbeknownst to investors, LG.Philips were using artificial antitrust mechanisms, including price fixing, to support LG.Philips' already inflated margins.
However, by late spring 2006, as LG.Philips' executives became aware of fines and jail sentences imposed for price fixing in the industry, they began ceasing their price-fixing behavior and rumors about the reasons for the sudden "weak pricing" in the LCD marketplace circulated throughout the markets. Without artificial anticompetitive mechanisms in place, LG.Philips' profits began to fall and its share price declined from $22 to $15.
On December 8, 2006, officials from South Korea's Fair Trade Commission appeared at LG.Philips' Seoul headquarters to proceed with a formal investigation of LG.Philips and its top executives. Then on December 11, 2006, LG.Philips announced it was being investigated for possible anticompetitive conduct in the LCD industry. The announcement spurred a two-day stock slide that erased about $1.6 billion in market value from the top five producers, including LG.Philips.
According to the class action complaint, during the Class Period, LG.Philips concealed the following material adverse facts from the investing public:
(a) from on or about June 2004 until on or about June 2006, LG.Philips and its co-conspirators entered into and engaged in a combination and conspiracy in the United States and elsewhere to suppress and eliminate competition by fixing the prices of LCD panel products to be sold to resellers and consumers; and
(b) as a result, LG.Philips' shares traded at inflated prices, enabling LG.Philips to consummate its initial public offering raising $1 billion, its secondary offering raising $1.4 billion, and obtain an additional $500 million in other securities offerings on terms otherwise unobtainable but for LG.Philips' conduct, including the use of defective prospectuses for each such offering.
Name (Stock Symbol)
L.G. Philips Co. Ltd. (LPL)
LG Display Co., Ltd. manufactures and supplies thin film transistor liquid crystal displays (TFT-LCD) to original equipment manufacturers and multinational corporations.
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