Caterpillar is sued by a shareholder after federal raid
(Reuters) - Caterpillar Inc was sued on Friday for allegedly deceiving shareholders about its business, one day after federal law enforcers raided three of its buildings in connection with a probe into the heavy machinery manufacturer's offshore tax practices.
In a complaint filed in Chicago federal court, Jacob Newman accused Caterpillar of defrauding him and other shareholders in regulatory filings by touting its commitment to good ethics, while concealing how it "unlawfully used foreign subsidiaries" to avoid paying billions of dollars of U.S. taxes.
Caterpillar did not immediately respond to requests for comment after business hours.
Shares of Caterpillar fell 4.3 percent on Thursday, wiping out more than $2.4 billion of the Peoria, Illinois-based company's market value.
The company said it believed the raid by officials from agencies including the Internal Revenue Service's criminal investigation division, the Department of Commerce and the Federal Deposit Insurance Corp was connected with an IRS probe related to a Swiss parts unit, Caterpillar SARL.
Caterpillar has been fighting an IRS demand that it pay $2 billion in taxes and penalties for shifting profit to the Swiss unit to lessen its U.S. tax bill.
Newman is seeking unspecified damages in his proposed class-action lawsuit on behalf of Caterpillar investors from Feb. 19, 2013 through March 1.
The lawsuit also names Caterpillar Chief Executive Jim Umpleby, Chairman Douglas Oberhelman and Chief Financial Officer Bradley Halverson as defendants. Oberhelman preceded Umpleby as chief executive.
Companies often face U.S. lawsuits accusing them of securities fraud shortly after unexpected negative news causes a decline in their stock prices. It is unclear how many lawsuits Caterpillar might face. Continued...