Three shareholders of armored vehicle manufacturer Force Protection Inc. are suing a group of the company's current and former executives, alleging that they caused the company's stock value to tumble and damaged the Ladson-based company's reputation in the marketplace.
The lawsuit accuses nine executives and directors of breach of fiduciary duty, insider trading and misappropriation of information, gross mismanagement, waste of corporate assets and abuse of control.
Named as defendants are Michael Moody, the company's chief executive, president and chairman, as well as current directors Jack A. Davis, Roger G. Thompson Jr. and John S. Day.
Former Chairman Frank Kavanaugh and former CEO Gordon R. McGilton also are named in the complaint, as are former executives R. Scott Ervin, Michael S. Durski and Raymond Pollard.
The shareholders filed the lawsuits on behalf of Force Protection, which means any monetary award would be paid to Force Protection, not the three stockholders.
Force Protection spokesman Tommy Pruitt said the claims are baseless.
"We believe that these claims are without merit and we're going to vigorously defend ourselves," Pruitt said.
The 36-page complaint, filed May 5 in Charleston County Court of Common Pleas by Barbara A. Hughes, Luther F. Hughes and Clayton Reed, alleges that the executives took advantage of undisclosed information to sell their shares of Force Protection "for considerably more than they were worth."
The lawsuit, for example, alleges Kavanaugh and McGilton sold more than 2 million shares in the company for more than $47 million while in possession of "material nonpublic information" not available to other investors.
According to the complaint claims, the defendants had a duty to ensure that Force Protection's financial reporting fairly represented the company's operations and financial condition, but the defendants "engaged in reckless and wrongful acts including the dissemination of false and misleading information in the various public statements issued by the company."
The shareholders are seeking unspecified compensation from the current and former company officials for damages suffered by Force Protection as a result of their actions.
"We're suing the officers and directors for falling down on the job," said Badge Humphries, an attorney with Mount
Pleasant-based Motley Rice who is representing the stockholders. "The goal of this suit is to hold those folks accountable."
Force Protection makes mine-resistant vehicles equipped with special V-shaped metal hulls credited with saving the lives of service members in Iraq and other war zones littered with roadside bombs.
The company's shares have fallen sharply since last May, when they posted a closing high of $30.27. The stock closed Wednesday unchanged at $4.01 a share.
At least 10 lawsuits have been filed by Force Protection investors in U.S. District Court in Charleston that make similar allegations. Those lawsuits, unlike last week's county court filing, are seeking class-action status.