SunEdison Inc continues to pile up problems for itself. One of its latest problems comes from a former employee, who has filed a lawsuit against the clean energy firm over its 401(k) plan. This isn’t good news for the company whos stock has lost one-third of its value since the start of 2016.
SunEdison’s Poor Investment Strategy Leads to Legal Trouble
Alexander Usenko, a former employee at SunEdison (SUNE), alleges that the company kept its stock in its 401(k) plan even though the firm knew that it was on the decline. As the stock fell in value, it hurt the workers’ overall 401(k) plan.
Filed at a U.S. District Court in St. Louis on Jan. 20, Usenko accuses executives in charge of the 401(k) plan that they “should have known” SunEdison Inc stock was artificially inflated. He added that they likely should have known that the firm was “in extremely poor financial condition” and faces “poor long-term prospects.
The ex-employee is seeking class action status for present and former employees who had the plan beginning Aug. 6, 2015. Since that time, SunEdison stock has collapsed from about the $17 mark to around $3 a share, which represents an 86 percent drop.
The complainant listed names on the board of directors as defendants. SunEdison has yet to issue a statement in response to Usenko’s lawsuit.
Does Usenko have a case? Well, according to federal law, retirement plan fiduciaries are mandated to find out if a company stock continues to be a sound investment option.
At the end of 2014, according to the firm’s latest savings plan filing, the SunEdison retirement plan maintained $136.8 million in net assets available for benefits.
SunEdison’s Legal Woes Mount
The latest legal trouble comes days after a securities class action lawsuit was filed.
This case alleges that the firm did not have the necessary funds to pay for its high growth and dividend. Since the company was laying off 15 percent of its workforce, the company revealed various disclosures regarding its financial condition.
Also, Appaloosa Management LP filed a lawsuit against the clean energy company. To prevent TerraForm Power Inc (NASDAQ:TERP), its yieldco, from acquiring Vivint Solar Inc’s (NYSE:VSLR) assets, the hedge fund is taking SunEdison to court.
Both lawsuits helped the stock experience a 20 percent drop in a matter of two days.
SunEdison Adds Former Partner to the Board
Bowing to pressure from hedge fund Greenlight Capital, SunEdison added David Einhorn, a former partner in the firm, to its board.
Einhorn previously had a 6.8 percent stake – Greenlight has four percent – in SunEdison as of Jan. 15. However, Einhorn lost more than 20 percent last year because of a bet he made on SunEdison that blew up in November.
Greenlight Capital is looking to purchase the solar company, or at least some of its assets.
During the Wednesday trading session, SunEdison Inc was trading in positive territory at $3.34 a share.