Tennant faces securities probe after 23% stock drop from ERP failure

Bleichmar Fonti & Auld LLP is investigating Tennant Co. for securities law violations after its stock lost 23.4% on Feb. 24.

"Tennant assured investors the ERP project was progressing as anticipated and was on time and on budget, but the North America rollout caused severe operational disruptions," the firm said in a statement.

The industrial cleaning equipment maker lost about $30 million in sales and faces more than $20 million in remediation costs this year, compared with the roughly $5 million it had planned to spend. Shares fell $19.28 to $63.02 on Feb. 24, the day the company disclosed that its new enterprise resource planning system had prevented it from processing and shipping customer orders in North America.

The investigation centers on whether Tennant made false or misleading statements about the ERP implementation. The company had described the Asia-Pacific launch as "successful" and said it had "mitigated disruptions and stabilized operations," while assuring investors the project was "progressing as we've anticipated."

BFA Law has recovered more than $900 million from Tesla Inc.'s board and $420 million from Teva Pharmaceutical Industries Ltd. in recent securities cases. The firm was named a top plaintiff law firm by Chambers USA and The Legal 500.

The probe adds legal risk to a stock already trading near its lowest levels since the ERP-related selloff. Investors will watch for any restatement of prior financial results or additional disclosures about the scope of the operational disruptions.

This article is for informational purposes only and does not constitute investment advice.