Cemtrex Inc. Thursday announced it had engaged a Seattle law firm to fight securities class action lawsuits.
The lawsuits were filed after a blogger identified as Richard Pearson published an item on the financial web site Seeking Alpha in February that raised questions about Cemtrex’s auditors and investment bank, and alleging undocumented stock sales by insiders. Shares of the company fell sharply on Feb. 22, the day the blog post was published, shedding 33.5 percent to close at $3.40.
Farmingdale-based Cemtrex provides manufacturing services for custom electronics and monitoring instruments for industrial processes and environmental compliance.
The company said it had hired Douglas Greene, an attorney with Seattle-based Lane Powell PC, to defend against three securities class action complaints against the company filed in the U.S. District Court for the Eastern District of New York. Those legal actions are expected to be rolled into a single lawsuit, Cemtrex said in a news release.
On Wednesday, the company announced it had spent $774,415 to buy back more than 201,430 shares of Cemtrex common stock at an average price of $3.84 per share.
Saagar Govil, chief executive of the company, said the buyback was carried out because the stock price was “quite attractive” after the decline, and to show confidence as the company faces challenges from short-sellers. Short sellers seek to profit from declining stock prices.
Cemtrex shares fell 9.6 percent Thursday to close at $3.66 on the Nasdaq Capital Market.
Pearson’s Feb. 22 blog post ran under the headline: “Cemtrex: Documents And Photos, All Signs Point To Deception And Failure.” The self-described short-seller and activist investor did not respond Thursday to a message seeking comment.