BERKELEY, Calif., Nov. 9, 2011 /PRNewswire/ -- Powell Industries, Inc. ("Powell" or the "Company") (NASDAQ GS: POWL) is the target of an investigation by investor-rights law firm Hagens Berman concerning possible securities fraud affecting investors who purchased POWL stock between May 3, 2011 and November 8, 2011.
On November 8, 2011, Powell Industries announced it would restate its financial results for the second and third quarters of 2011 due to accounting errors, and that the financial statements for these quarters could no longer be relied upon. According to the company, accounting errors in recording customer change orders and erroneous journal entries, among other issues, led to the company's overstatement of earnings.
News of the overstatement sent the shares of the company falling nearly 20 percent in after-hours trading.
The Company claims that these accounting errors were not known in September when the Company terminated their CEO and put in place a new Chief Accounting Officer."We are investigating whether these so-called accounting errors were in fact known at that time, or were part of a scheme to inflate revenue at a time the Company was negotiating an increase in its line of credit last May," said Reed Kathrein, partner at Hagens Berman. "If the price was inflated due to fraudulent representations, Powell would be in violation of the federal securities laws." Persons with knowledge that may help the investigation are encouraged to contact the firm. The SEC recently finalized new rules as part of its implementation of the whistleblower provisions in the Dodd-Frank Wall Street Reform Bill. The new rules protect whistleblowers from employer retaliation and allow the SEC to reward those who provide information leading to a successful enforcement with up to 30 percent of the recovery.