By Ted Nesi
PBN Web Editor
PROVIDENCE – An institutional investor filed a lawsuit against Textron Inc. today that accuses the conglomerate of misleading shareholders about the underlying strength of its business.
The plaintiffs are asking the court to award class-action status to investors who purchased Textron stock between Jan. 17, 2007, and Jan. 29 of this year. They contend Textron inflated its backlog of Cessna and other aircraft orders in public statements by including customers who were unlikely to have them fulfilled.
“Textron was accepting orders for business jets from a growing number of customers that were mere startup and/or financially distressed fleet operators who neither intended nor possessed the financial resources to pay for or take delivery of aircraft,” the suit argues.
It also accuses Textron of masking the depth of the problems in its Textron Financial Corp. subsidiary, which is now being downsized after being severely damaged in the credit crunch.
Michael Maynard, a spokesman for Textron, declined to comment on the suit when reached by Reuters.
The suit was filed in U.S. District Court in Providence today by the law firm Coughlin Stoia Geller Rudman & Robbins LLP on behalf of the City of Roseville (Mich.) Employees’ Retirement System.
The suit also names Textron CEO Lewis B. Campbell and former Textron chief financial officer Ted French as defendants, Reuters said.
Additional information is available at csgrr.com.