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Shareholder Lawsuit Against Navistar International Alleges Fraud

A class action lawsuit was announced late Friday against truck and engine manufacturer Navistar International, alleging the company misled investors about its finances as well as problems meeting federal regulations with its diesel engines.

Evan Lockridge
Evan LockridgeFormer Business Contributing Editor
April 8, 2013
2 min to read


A class action lawsuit was announced late Friday against truck and engine manufacturer Navistar International, alleging the company misled investors about its finances as well as problems meeting federal regulations with its diesel engines.

The law firm representing the plaintiffs, Ryan & Maniskas, says in a statement that the suit was filed in U.S. District Court for the Northern District of Illinois on behalf of purchasers of common stock of between Nov. 3, 2010 and Aug. 1, 2012.

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The complaint alleges that throughout the period, Navistar issued materially false and misleading statements regarding its business and financial prospects. Specifically it says that Navistar's attempted methods to achieve compliance with U.S. Environmental Protection Agency emissions guidelines had failed and Navistar would be forced to revise its plan to meet them, incurring enormous costs to the company.

The suit also alleges Navistar did not have engines ready to meet the 2010 EPA standards, and that Navistar's filings with the Securities and Exchange Commission contained incomplete and misleading disclosures, including statements about the costs of recalls and details of various debts.

Last year Navistar International announced it was abandoning its go-it-alone approach in being the only engine maker in North America to use only exhaust gas recirculation technology in order to comply with U.S. emissions rules. The company announced it was joining all other diesel engine makers in using selective catalytic reduction technology, which requires the use of diesel exhaust fluid.

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The company worked out an agreement where it would once again offer Cummins engines in its trucks and announced a fourth quarter net loss of $2.8 million, partially due to a spike in warranty costs along with declining sales.

When contacted for comment about the lawsuit, Navistar spokesman Steve Schrier responded: “as a matter of policy, Navistar does not comment on pending litigation.”

The law firm representing shareholders has set up a special website for plaintiffs who want to join the suit or be considered a lead plaintiff.

Navistar also has also gone through various management changes, including naming Lewis Campbell as interim CEO to replace Dan Ustian, who retired after coming under criticism for his role in the company's strategy for meeting 2010 EPA emissions rules, and promoting Troy Clarke to president and chief operating officer.

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