CLAYTON, Mo. (CN) – Monsanto executives misled shareholders about the revenue its Roundup product would generate and one executive profited from insider trading, a shareholder claims in a derivative complaint in St. Louis County Court.
Named plaintiff Ernesto Espinoza claims Monsanto told shareholders that profits from its glyphosate and Roundup products would exceed $600 million this year.
But Monsanto executives “recklessly disregarded the fact that by early 2009 demand for the company’s Roundup product was greatly decreasing due to the influx of cheaper generic products into the market from China and lower prices for similar products from its competitors,” the complaint states.
Espinoza claims Monsanto executives intentionally made false statements to keep stock prices high.
“After months of duping the public, the defendants could no longer hide that the company’s glyphosate business was struggling and that Roundup sales would not meet the guidance they provided,” the complaint states. “The company massively lowered the expected revenues from its glyphosate business by $400 million to between $50 to $200 million dollars.”
Espinoza claims Gwendolyn King, a Monsanto director, sold her Monsanto stock for a profit of $1.5 million shortly after the company provided its 2010 guidance for Roundup sales, because she knew the company would not be able to meet its stated expectations.
Espinoza also claims Monsanto allowed Terrell Crews, its executive vice president and CFO, to step down with full benefits, including a vesting of his stock options that were artificially inflated.
“These actions have devastated Monsanto’s credibility and caused its market capitalization to decline by approximately $22.9 billion, approximately 45 percent from its high on May 20, 2009 to when the truth was revealed on May 27, 2010,” the complaint states.
Espinoza seeks an undetermined amount of damages and stronger supervision of Monsanto’s board. He is represented by James Rosemergy with Carey, Danis & Lowe in St. Louis.
Thirteen individual Monsanto executives are named as defendants. Monsanto is named as a nominal defendant.