NEW YORK (TheStreet) -- SolarCity Corp (SCTY) shares are down 6.5% to $55.24 in trading on Monday.
The decrease comes following the report that the Shareholders Foundation was filing a lawsuit on behalf of some of the company's common stock holders. The suit alleges that SolarCity is in violation of Federal Securities laws.
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The suit stems from a March 18 announcement the company made to investors that the previous financial statements for the annual reports ended December 31, 2010-2012 should no longer be relied upon.
"The plaintiff claims that that the defendants made allegedly false and/or misleading statements and/or failed to disclose that SolarCity Corp lacked adequate controls over financial reporting, that SolarCity Corp misclassified its reported expenses, that... SolarCity Corp's financial statements were materially false and misleading at all relevant times," said the Shareholders Foundation.
TheStreet Ratings team rates SOLARCITY CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate SOLARCITY CORP (SCTY) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow, poor profit margins, generally high debt management risk and feeble growth in its earnings per share."