Securities class action complaint blasts faltering Forcefield

Three days after investors filed a federal securities class action lawsuit against Forcefield Energy, the company announced in a regulatory filing that its executive chairman has been arrested for alleged securities fraud.

The news spiked a 21 percent drop in Forcefield’s stock price and NASDAQ halted trading on the company’s shares, requesting more information on the corporate situation. Former chairman Richard St-Julien also faces a separate criminal lawsuit.

Forcefield manufactures and distributes alternative energy products and commercial LED lighting. The class action, filed in United States District Court for the Southern District of New York, alleges that plaintiffs purchased stock based on false pretenses between September 2013 and April 15, 2015. The lawsuit cites a series of paid promotional articles that touted Forcefield’s business model and investment opportunities as a method of raising public capital.

Plaintiffs highlighted the use of “stock promoters” – writers paid to develop articles and who “pretended to be independent authors.” The lawsuit alleges that many of the laudatory articles written about Forcefield were in fact paid for by the company and edited by management prior to publication.

Members of the class also allege that Forcefield’s failed to reveal their “troubling history with fraudulent companies,” including CEO and now chairman of the board David Natan’s past employment with a firm that, according to the complaint, found test subject for clinical drug trials. Many of those affected were low-income individuals or non-English speakers.

In a Securities and Exchange Commission filing, Natan responds to the lawsuit, saying, “[T]he Complaint filed by one individual that had purchased 650 shares, appears to seek class status on behalf of all persons who purchased the Registrant’s securities between September 16, 2013 and April 15, 2015 (the “Period”) and alleges violations by the Registrant and the other persons named therein of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The Complaint seeks an unspecified amount of damages.

He added, “Although the ultimate outcome of this matter cannot be determined with certainty, the Registrant believes that the allegations stated in the Complaint are without merit against the Registrant and the Individual Defendants, and the Individual Defendants and the Registrant intend to defend themselves vigorously against all allegations set forth in the Complaint.”