This securities fraud class action arises out of defendants’ representations and omissions made regarding the demand for FMC’s suite of crop protection products during the COVID-19 pandemic and afterwards. As the realities of supply chain disruptions gripped the world, FMC’s distribution partners sought to purchase as much product as possible while it was available. Beginning in 2020 and stretching into 2022, FMC welcomed this boom in sales across all of its products, including its flagship diamide insecticides.
While this practice of “pre-buying” was well known within the Company, investors were kept in the dark as to the reality of clients pre-emptively buying more product than what was needed for the growing season. At the same time, FMC was facing the reality of its diamide insecticides losing their patent protections and facing competition for generic versions of the same products, being sold at a fraction of the price. In spite of the knowledge that the demand for their products would eventually be crippled by customers stockpiling their products and generic competitors that would severely cut into sales of FMC’s flagship products, FMC sought to convince the public that the high sales numbers were a new normal with no signs of slowing down, and that generic competition was only a worry in the distant future.
Plaintiffs allege defendants made repeated representations throughout the Class Period FMC was seeing robust demand for its products around the globe, and that there were no issues with the amount of inventory being held by its customers besides some transient weather issues that would soon be forgotten. Then on May 2, 2023, FMC announced to the public that it was lowering its growth expectations for the upcoming quarter, but still assured investors that there were no further issues to report. The same was true on July 10, 2023 when FMC again revised down its revenue and EBITDA outlooks for the year, still without disclosing the realities of its current demand environment. It wasn’t until Blue Orca Capital published a report on September 7, 2023, detailing the full inventories of FMC’s clients and the already real threat of generic products that were already legal in countries like China and India that FMC was forced to publicly grapple with the truth. Not until late October 2023 would FMC fully explain to investors that it expected the destocking of its clients’ warehouses to extend into the following year, and that its cratering sales numbers and cash flow had driven the Company to renegotiate its credit agreements and begin a full restructuring of its Brazilian operations, the Company’s single largest sales region for the past five years.
On July 17, 2024, plaintiffs filed a 186-page complaint on behalf of a putative class of investors who purchased FMC common stock between February 9, 2022 and October 30, 2023, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Through the complaint, plaintiffs seek to recover damages suffered by investors in FMC during the Class Period. Defendants are scheduled to respond to the complaint on or before September 17, 2024.