Tuesday, February 7, 2012

"Colorado Class Action Complaint Accuses Molycorp execs of fraud" (MCP)

"Daddy, daddy, is that Bozo the Clown?
No, that's Bozo the class-action attorney."
From Mineweb:
Was Molycorp's promotion of the Mountain Pass mine-attracting the attention of U.S. lawmakers and the international business community to looming domestic rare earths shortages-little more than hype?

A plaintiff's complaint filed in U.S. District Court in Colorado accuses Molycorp CEO Mark A. Smith and CFO James S. Allen of making "false and misleading statements" about Molycorp's Mountain Pass mine's rare earths production timetable, as well as the company's earnings, reportedly causing the stock to "trade at artificially inflated prices" between March 9, 2011, and Nov. 10, 2011.

"Specifically, defendants misrepresented and/or failed to disclose the following adverse facts during the Class Period: (a) Molycorp's development and the expansion of the Mountain Pass mine was not progressing on schedule and would not allow the company to reach rare earth oxide production rates at the end of calendar 2012 and 2013," the complaint alleged, "and (b) end users had been reducing demand for the company's products as prices for rare earth elements increased."

"The lack of progress in development and expansion of the Mountain Pass mine make it difficult, if not impossible for the company to produce and deliver certain magnet products for its key customers," the plaintiffs claimed....MORE
You have to read the rest of it to understand just how contrived this whole thing is. When I first heard about the suit Robbins Geller was still looking for a lead plaintiff.
I've no dog in this fight and in fact would welcome the chance to buy MCP's assets out of a bankruptcy estate but it's not going to happen.