Fluor to pay $33M settlement in securities fraud lawsuit

Dive Brief:

U.S. District Court Judge Brantley Starr in the Northern District of Texas granted the motion for final approval on Tuesday for a $33 million securities fraud class action settlement between Fluor and its investors, according to a court document.
Investors accused the Irving, Texas-based company of misleading them about construction bidding strategy and scheduling, according to the order.
Awards included $116,000 to the lead plantiff’s counsel and $2,000, $25,000 and $25,000 for the Wayne County Employees’ Retirement System, the Town of Fairfield Employees’ Retirement Plan and the Town of Fairfield Police and Firemen’s Retirement Plan, respectively. Those awards will come out of the settlement fund, according to court documents.

Dive Insight:

Several investors filed the class-action lawsuit, alleging Fluor bid unrealistically low on projects and misrepresented their bidding strategy as careful and conservative. They also argued that Fluor lied to investors, telling them these projects were on schedule when it knew they were not.

Judge Starr dismissed most investor allegations in the complaint last year regarding construction progress, procedures and reporting practices, according to court records.

Fluor declined to comment on the settlement. The court dismissed with prejudice all claims against Fluor, meaning the plaintiffs cannot refile the same claim against it.

Fluor recently reported that it earned $22 million in profit during its third quarter earnings call, compared to a gain of $41 million in the same period last year, while its backlog jumped about 22% from a year ago.

Andrew Wittmann, senior research analyst at Milwaukee-based financial services company Baird, pegged Fluor’s results as “another what-could-have-been” quarter in an investor note. He said while new awards were high, additional costs on three legacy projects continue to impact results, namely the I-635 LBJ East Freeway project in Texas, the Gordie Howe project in Michigan and the LAX Automated People Mover project in California.