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NEW YORK — Murray, Frank & Sailer LLP announced Feb. 18 that it has filed a class action complaint in the U.S. District Court for the Southern District of New York (No. 10 Civ. 1175) on behalf of all individuals and institutions who purchased Toyota Motor Corp. publicly traded securities between Dec. 22, 2006, and Feb. 2, 2010.
Toyota American Depositary Shares (ADSs), as well as Toyota common stock, which trades on the Tokyo Stock Exchange, are included in this case. The complaint seeks damages for violations of the Securities Exchange Act of 1934.
Members of the class have until April 9, 2010, to move the court to serve as lead plaintiff.
The complaint names Toyota Motor Corp., Toyota Motor North America Inc., Toyota Motor Sales U.S.A. Inc. and certain officers and directors of these companies, as defendants. The complaint alleges that during the class period, the defendants issued materially false and misleading statements regarding the company’s operations, its business, and its outlook. Specifically, defendants failed to disclose ongoing safety issues and quality control problems with Toyota’s automobiles, especially the fact that accelerator pedals installed in many of Toyota’s cars were defective and could become stuck in the depressed position, leading to unintended acceleration, the plaintiffs allege. As a result of defendants’ false statements, Toyota’s securities traded at artificially inflated prices during the class period, they claim.
According to the lawsuit:
The safety and quality problems that Toyota was experiencing were partially disclosed on Aug. 15, 2007, when the National Highway Transportation Safety Association announced that it was stepping up an investigation into reports that Toyota’s Lexus branded cars were susceptible to unintended acceleration. As a result of this news, the price of Toyota ADSs dropped $4.80 to close at $113.19. Toyota common stock also dropped approximately 9 percent. Another partial revelation occurred on Oct. 16, 2007, when Toyota tumbled from number one to number three in overall reliability in the annual Consumer Reports reliability survey. The price of Toyota ADSs dropped another 5.5 percent to close at $106.40 in response to this news. Toyota common stock likewise dropped approximately 5 percent. Although these events partially disclosed that Toyota was having problems with the quality and safety of its vehicles, they did not reveal the full extent of these problems.
On Jan. 21, 2010, Toyota announced a massive recall of eight different vehicle models relating to defective accelerator pedals. On Jan. 26, 2010, Toyota announced that it was halting the sale of these models as a result of the accelerator pedal defect, and also announced that the company was shutting down its North American assembly lines for one week beginning Feb. 1, 2010. As a result of this news, Toyota’s ADSs plunged $7.01 per share to close at $79.77 per share on Jan. 27, 2010, for a drop of more than 8 percent. Toyota common stock also fell, dropping more than 4 percent. On Feb. 2, 2010, after the market closed, Toyota reported that its U.S. sales for January 2010 had dropped by 16 percent from a year ago because of the recall and subsequent sales suspension of its most popular models. As a result of this news, Toyota’s ADSs fell $4.69 per share, closing at $73.49 per share on Feb. 3, 2010, for a decline of 6 percent. Toyota’s common stock also dropped approximately 6 percent.