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LSB Industries (LXU) Securities Fraud Class Action Lawsuit


     This class action complaint is brought against LSB Industries, Inc., a manufacturing and marketing company, for making false public statements about the estimated costs of expanding its El Dorado Facility and, thereby, artificially inflating its net revenues.

Who Is Affected?

     This is a class action on behalf of purchasers of LSB common stock between May 8, 2015 and August 7, 2015, inclusive, pursuing remedies under the Exchange Act of 1934.  LSB manufactures and sells chemical products for the agricultural, mining and industrial markets as well as commercial and residential climate control products, such as water source and geothermal heat pumps, hydronic fan coils, modular geothermal and other chillers and large custom air handlers.  LSB is incorporated in Delaware and has its principal place of business in Oklahoma City, Oklahoma.  Its shares trade on NYSE under the ticker symbol “LXU.”

Procedural History

     This class action lawsuit was filed on September 25, 2015 and is captioned Dennis Wilson et al. v. LSB Industries, Inc. et al.  It was filed in the New York Southern District Court and the civil docket number is 1:15-cv-07614.  The class period runs from May 8, 2015 through August 7, 2015, inclusive.

     On May 8, 2015, at the beginning of the class period, LSB released its 2015 First Quarter report, wherein it stated that the El Dorado facility expansion project remained “on time and on budget.”

     On July 14, 2015, LSB issued a press release entitled “LSB Industries, Inc. Updates Status of El Dorado Facility Expansion,” wherein it disclosed that LSB’s El Dorado factory expansion project would run over budget, increasing from $495 million to $575 million.  LSB’s CEO, Barry Golsen, stated that the factors contributing to the increase in cost were productivity and quality issues with a subcontractor responsible for the installation of piping in the plant and that the original project estimates were based upon specific quantities of construction materials and labor-hours provided by the construction contractor.  The news caused LSB’s stock to fall 4% the following day. 

     On August 7, 2015, LSB announced that the expansion budget has gone up again to $680 million, which was significantly higher than the original $495 estimate.  The total cost of the project exceeded the previously projected, due to work performed by a previous subcontractor.  The announcement caused LSB stock to drop again over 34% the very same day.

     On September 3, 2015, LSB issued a press release announcing LSB’s leadership transition and that Barry Golsen will be stepping down as CEO, effective immediately.  While the report does not tie Golsen’s termination to the inadequate management and supervision of the El Dorado expansion project, it would seem the former was causally related to the expansion estimates mistakes. 

Current Case Status: 

     This case is in the notice period. When a shareholder brings suit under certain federal securities law, generally that shareholder must give notice via a press release. This notice starts a sixty-day period of time when any shareholder can investigate the underlying claims of the lawsuit and then elect to bring suit as well. At the end of this sixty-day period, the court appoints one shareholder (or a group of shareholders) to prosecute the securities litigation. We will review the docket again in June and update this page as warranted.

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