Arconic Inc. and its board of directors are facing a proposed securities lawsuit that claims Arconic knowingly sold flammable wall cladding used in the remodeling of London's Grenfell Tower and is therefore liable for the building's deadly fire.
Arconic Inc. and its board of directors are once again facing a proposed securities lawsuit filed in the wake of London’s Grenfell Tower fire, for which the complaint claims Arconic is liable. The case also names as defendants nine investment banks who were underwriters in the company’s initial public offering (IPO).
The lawsuit is centered around an allegedly misleading Registration Statement for Arconic's IPO prepared and filed by the defendants. The suit claims the statement omitted material facts about the company’s sales and marketing tactics and deceived investors into buying Arconic stock. The plaintiff argues stockholders were unlawfully subjected to financial losses when the public, in the wake numerous media reports, learned Arconic may be responsible for the Grenfell Tower fire.
Arconic reportedly sells two types of wall cladding for use in residential and office buildings – Reynobond PE, which has a highly flammable polyethylene core, and Reynobond FR, which is fire-resistant and more expensive. The case alleges that Arconic sold the cheaper panels to contractors for use in the Grenfell Tower project despite knowing the product was not appropriate for tall buildings and presented a fire hazard.
When Grenfell Tower, a 24-story residential housing building in West London, caught fire on June 14, 2017, media reports pointed toward the speed at which the fire spread on the building’s flammable exterior, ultimately linking Arconic’s sales tactics as the possible root cause of the disaster, the complaint notes.
Upon this news, Arconic stock prices fell significantly, according to the complaint. Investors argue that Arconic deceived them by failing to disclose the truth of its marketing and sales tactics, which “directly conflicted with the purported strong culture of safety, ethics and legal compliance that the Company claimed to have,” the suit says.