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ECOtality now has one more worry to take care of.
Law Offices of Howard G. Smith announced Friday, August 23, that it is investigating potential claims on behalf of purchasers of the securities of ECOtality, Inc. concerning possible violations of federal securities laws.
The investigation focuses on ECOtality’s operations and financial prospects between April 16, 2013 and August 9, 2013.
ECOtality manufactures and sells charging systems for electric vehicles (EV), including the Minit-Charger line of fast-charge systems for off-road industrial applications.
The law firm said the investigation concerns allegations that the Company misrepresented or failed to disclose that:
- certain of ECOtality’s charging systems had been causing overheating, and even melting connector plugs, when charging vehicles;
- the Company was not achieving enough commercial sales and installations to sustain operations in the second half of 2013;
- the Company was not on track to meet the scheduled release of a new Minit Charger product for industrial customers in the second half of 2013;
- the Company was unable to obtain the financing to meet its short-term and long-term capital needs and would be unable to meet its obligations to the U.S. Department of Energy’s EV Project;
- the Company was liable to the U.S. Department of Labor for $855,000 for the payment of back wages and damages.
On August 12, 2013 ECOtality issued a press release announcing that it had hired a “restructuring” adviser to evaluate options, including new financing, a possible sale of the Company or bankruptcy filing.
Following this news, the price of ECOtality shares dropped nearly 80 percent, to $0.30 per share, from the previous day’s close of $1.46, on volume of more than 15 million shares traded.