Shoals Technologies Group, Inc. (SHLS) Securities Fraud Class Action

The litigation focuses on the propriety of Shoals’ statements about the quality and reliability of wire harnesses used in its electrical balance of systems (“EBOS”) solutions that presented excessive pullback of wire insulation at connection points (“wire shrinkback”), and on the company’s related accounting.

The complaint alleges that Shoals made misleading statements and failed to disclose that: (1) it did not deliver EBOS (which utilize a custom wire harness for aggregating electricity from multiple solar panels to deliver that electricity to inverters) products that met the highest levels of quality and reliability; (2) it received reports of exposed copper conduit in EBOS wire harnesses in a large number of solar fields and was aware that a significant portion of its wire harnesses had defects; (3) it would have to incur between $60 million and $185 million in costs to remediate the wire shrinkback issue; and (4) it understated its cost of revenue by millions of dollars.

Investors learned the truth on Nov. 7, 2023, when Shoals filed its Q3 2023 financial results and held its earnings call, revealing that wire shrinkback was far more severe than previously disclosed. In particular, Shoals said wire shrinkback affected 30% of harnesses the company installed during 2020 – 2022 and booked a $50.2 million warranty expense related to the shrinkback issue.  The company also estimated a range of potential losses related to the shrinkback issue of $59.7 million to $184.9 million.

In response to this news, the price of Shoals shares fell $3.28 (over 20%) over the next two trading days.

FREQUENTLY ASKED QUESTIONS ABOUT THE CASE

What is the SHLS securities class-action case about?

We are investigating whether Shoals intentionally understated its cost of revenues while concealing the extent of its wire shrinkback problems.

WHAT SHOULD I DO?

I worked at SHLS. What should I do?

If you were an employee of SHLS, you may have valuable information that could be relevant to the investigation. Hagens Berman is one of the nation’s top whistleblower law firms, and has successfully represented many individuals who come forward with information regarding corporate malfeasance. Under the new SEC Whistleblower program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, contact Reed Kathrein at 844-916-0895 or [email protected].

There are multiple law firms participating, do I need to contact all of them?

No, you do not need to contact all participating law firms. Generally, class-action investigations and lawsuits are consolidated into a single case to streamline the legal process, and attorneys from only a few law firms are selected to serve in a leadership role on the consolidated case. Hagens Berman has a proven track record of being appointed to leadership roles in complex, multidistrict litigation regarding investor fraud and other consumer rights issues, and your claim will be handled by attorneys who have helped secure approximately $325 billion in class-action settlements on behalf of individuals who have suffered due to corporate malfeasance and the wrongdoing of other powerful institutions.

AM I ELIGIBLE?

What is the threshold amount to be eligible? What are “substantial” losses?

The threshold amount and the definition of "substantial" losses may vary depending on a number of factors specific to the case, including the size of the company, market cap, shares outstanding and who holds them and the damages alleged by the fraud. In general, to be eligible to participate in a class-action lawsuit, you must be able to demonstrate that you suffered financial losses as a result of the alleged wrongdoing and that your losses meet the criteria set by the court or law firm. Fill out the form and submit your losses.

CAN I PARTICIPATE?

Am I affected? What do I need to do to participate?

If you were an investor in SHLS, you may be affected and eligible to participate in the case. To determine your eligibility and potential involvement, fill out the form and submit your losses.

Can any SHLS investor participate?

In most class-action investigations and cases, any investor who meets the eligibility criteria, including purchasing the shares during the relevant period, can participate, regardless of the size of their investment. Fill out the form to find out your rights.

I bought on a non-U.S. Exchange. Can I participate?

No. This investigation only covers shares bought on a U.S. exchange, i.e. NASDAQ or NYSE. Fill out the form to find out your rights.

Am I included if I still hold my shares, or do I need to sell to participate?

Participation is based on purchasing shares during the relevant period, rather than your current holdings. Accordingly, you do not need to sell to participate. Fill out the form to find out your rights.