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Cohen Milstein Sellers & Toll PLLC Announces Investigation Of A123 Systems, Inc.

Cohen Milstein Sellers & Toll PLLC is conducting an investigation to determine whether A123 Systems, Inc. (“A123” or the “Company”) and certain of its officers and directors made false and misleading statements and/or omissions in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.

A class action lawsuit has been filed in the U.S. District Court for the Southern District of New York by another law firm on behalf of purchasers of the common stock of A123 Systems, Inc. (NASDAQ: AONE) between February 28, 2011 and March 23, 2012, inclusive (the “Class Period”).

A123 designs, develops, manufactures, and sells rechargeable lithium-ion batteries and battery systems, and its revenues are generated by just a few companies such as Fisker Automotive, Inc. and BAE Systems, both of which account for a substantial portion of the Company’s revenues.

The complaint alleges that A123 and certain of its officers and/or directors (“Defendants”) misrepresented and/or failed to disclose that: (1) the Company had severe manufacturing deficiencies at its Livonia, Michigan manufacturing facility, which produced defective prismatic cells that resulted in premature failure of battery modules and packs; (2) A123 would likely be required to recall and replace the affected modules and packs and incur substantial costs in doing so, threatening the financial viability of the Company; and (3) as a result of the foregoing, the Company’s financial statements were materially false and misleading.

On December 23, 2011, Bloomberg News reported that in a memo on A123’s website, it stated that the Company had found a “ potential safety issue” in batteries it had supplied to Fisker, but that the Company had already “developed a confirmed repair for this situation” to fix the fewer than 50 cars affected. The memo further stated that the Company expected a “ minimal financial impact” and that its relationship with Fisker “ remains strong.”

On March 26, 2012, A123 announced that it would incur more than $55 million in costs over the next several quarters to replace “ potentially defective battery packs,” and had “ launched a field campaign to replace battery modules and packs that may contain defective prismatic cells produced at A123's Livonia, Mich. manufacturing facility.” The Company stated that it had already begun building replacements and expected to begin shipping replacement modules and packs to affected customers that week, and that the expected cost of the replacement program would be spread “ over the next several quarters.” The Company had previously projected 2012 revenues of $230 million to $300 million. The price of A123 shares fell from $1.70 to $1.41 on March 26, 2012 .

Cohen Milstein encourages all investors who purchased A123 common stock between February 28, 2011 and March 23, 2012 or former employees with information concerning this matter to contact the firm.

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