Case Summary

The Chemours Company

NYSE: CC

Case Details

  • Taylor, Jr. v. The Chemours Company et al.
  • Class Period:February 10, 2023 - February 28, 2024
  • Date Filed:March 21, 2024
  • Jurisdiction:U.S. District Court, Delaware District Court
  • Docket Number: 1:24-cv-00361
  • Lead Plaintiff Deadline: May 20, 2024
Days Left to
Seek Plaintiff
27

Overview

A class action lawsuit has been filed against The Chemours Company (“Chemours” or the “Company”) (NYSE:CC) and certain of the Company’s current and former senior executive officers alleging violations of the Securities Exchange Act of 1934.  The Chemours lawsuit is brought on behalf of all persons and entities who purchased or otherwise acquired Chemours common stock between February 10, 2023 and February 28, 2024, both dates inclusive (the “Class Period”), and investors have until May 20, 2024 to seek appointment as lead plaintiff of the Chemours class action lawsuit.

Chemours is an industrial and specialty chemical company for a number of markets including, among others, the “coatings, plastics, refrigeration and air conditioning, transportation, semiconductor and consumer electronics, general industrial, and oil and gas” markets.  

After the market closed on February 9, 2023, Chemours announced its fourth quarter and full year 2022 financial results.  Chemours reported Free Cash Flow (defined as cash flows from operations, less purchases of property, plant, and equipment) of $94 million in the fourth quarter of 2022 and $447 million in full year 2022, demonstrating Chemours’s continuing ability to generate strong Free Cash Flow.  The following day, February 10, 2023 (the first day of the Class Period), Chemours filed its 2022 annual report on Form 10-K (the “2022 Annual Report”) with the U.S. Securities and Exchange Commission and reiterated that it generated Free Cash Flow of $447 million in full year 2022.  In connection with the 2022 Annual Report, the Company’s Chief Executive Officer (“CEO”), Mark Newman, and then-Chief Financial Officer (“CFO”), Sameer Ralhan, certified the accuracy of the Company’s financial reports and the adequacy of the Company’s internal control over financial reporting.

Thereafter and throughout the Class Period, Chemours reported quarterly and year-to-date Free Cash Flow metrics in each of the Company’s quarterly financial reports, and certain Defendants certified the accuracy of the Company’s financial reports and the adequacy of the Company’s internal control over financial reporting.  Prior to and during the Class Period, Chemours also set and publicized certain criteria for executive compensation.  For example, pursuant to Chemours’s Annual Incentive Plans for 2022 and 2023, the Company’s senior executive officers (including the CEO and CFO) were entitled to additional cash compensation if certain targets, including Free Cash Flow targets, were met.  Similarly, pursuant to Chemours’s Long-Term Incentive Plans, the Company’s senior executive officers (including the CEO and CFO) were entitled to stock compensation if certain targets, including Free Cash Flow Conversion (defined as cash flows from operations, less purchases of property, plant, and equipment divided by Adjusted EBITDA) targets, were met.

Investors began to learn the truth on February 13, 2024, when Chemours announced that it has postponed the release of its financial results and conference call related to the fourth quarter and full year ended December 31, 2023, which had previously been scheduled for February 14, 2024 and February 15, 2024, respectively, and that it now expected to issue its fourth quarter and full year 2023 financial results after market close on Wednesday, February 28, 2024.  According to the Company, the delay was necessary because it needed additional time to complete its year-end reporting process and is evaluating its internal control over financial reporting with respect to maintaining effective controls related to information and communications.  Chemours also revealed that it needed additional time for its Audit Committee to conduct a related internal review.  In response to this initial development, the price of Chemours common stock fell $3.85 per share, or more than 12%, from a close of $30.49 per share on February 13, 2024, to close at $26.64 per share on February 14, 2024.

Then, before the market opened on February 29, 2024, Chemours stunned investors when it announced that it was delaying the filing of its annual report for 2023 and that its Board of Directors had placed President and CEO Mark Newman, Senior Vice President and CFO Jonathan Lock, and Vice President, Controller and Principal Accounting Officer Camela Wisel on administrative leave, pending the completion of an internal review being overseen by the Audit Committee of the Board of Directors with the assistance of independent outside counsel.  According to the Company, the scope of the investigation includes the processes for reviewing reports made to the Chemours Ethics Hotline and Chemours’s practices for managing working capital, including the related impact on metrics within the Company’s incentive plans and certain non-GAAP metrics in the Company’s financial reports.  Given the importance of these issues, not only to executive compensation, but also investors’ assessment of Chemours’s financial performance, the Company acknowledged that it is evaluating one or more potential material weaknesses in its internal control over financial reporting as of December 31, 2023, with respect to maintaining effective controls related to the control environment, including the effectiveness of the tone at the top set by certain members of senior management.

In response to these revelations, the price of Chemours common stock plummeted $9.05 per share, or more than 31%, from a close of $28.72 per share on February 28, 2024, to close at $19.67 per share on February 29, 2024.  On March 6, 2024, after the end of the Class Period, Chemours announced that the Audit Committee concluded that the members of senior management who were placed on administrative leave the previous week had engaged in efforts in the fourth quarter of 2023 to delay payments to certain vendors that were originally due to be paid in the fourth quarter of 2023 until the first quarter of 2024, and to accelerate the collection of receivables into the fourth quarter of 2023 that were originally not due to be received until the first quarter of 2024.  Critically, the Audit Committee found that these individuals engaged in these efforts in part to meet free cash flow targets that the Company had communicated publicly, and which also would be part of a key metric for determining incentive compensation applicable to executive officers.  According to the Company, the Audit Committee review also determined that similar actions, though to a lesser extent, were taken in the fourth quarter of 2022, resulting in a significant increase in these cash flow measures for the quarter ended December 31, 2022, and a decrease in these measures in the first quarter of 2023.

*          *          *

If you purchased or otherwise acquired Chemours common stock between February 10, 2023 and February 28, 2024, both dates inclusive, and suffered substantial losses, and you wish to serve as lead plaintiff in this lawsuit, we encourage you to submit your information to DiCello Levitt LLP via the form on this page. 

You can also contact DiCello Levitt partner Brian O’Mara by calling (888) 287-9005 or at investors@dicellolevitt.com. 

The deadline to apply to the Court to serve as a lead plaintiff in the Chemours lawsuit is May 20, 2024.

Join This Action

Name(Required)
Address(Required)
Are you a current or former employee at the company?(Required)

Purchases

Purchases Buy Date Quantity Purchase Price per share or security Actions
       

Sales

Sale Type Sale Date Quantity Sale Price per share or security Actions
       

Upload Documents

Drop files here or
Accepted file types: xls, xlsx, doc, pdf, jpg, jpeg, Max. file size: 50 MB, Max. files: 5.