What is it that the board of directors of EnergyConnect Group,Inc.(OTC:ECNG) could have done in order to provoke so many law firms to investigate them? Just when everything looked so bright with Johnson Controls announcing its plans to acquire EnergyConnect, the investigations began. Breaches of Fiduciary Duty and other violations are the commonly mentioned reasons. The more interesting part – if the pace of launching investigations remains throughout the month, there might be more than a hundred lawyers in April involved in the hunt for possible naughty behaviour.
All in all, it seems that this March would be an intense period for EnergyConnect. The price skyrocketed last week as a result of the above mentioned intention of Johnson Controls, just like the volumes of traded shares as people were rushing to get a piece of the action. Quite interesting, on the very same day that the acquisition announcement came out, three law firms also announced that they would investigate the board of directors. One more did on the next day, one did on Saturday.
All the investigation activities revolve around potential claims against the board of directors regarding the proposed acquisition by Johnson. Simply put – the transaction might undervalue the company because of past performance and the target price of $2.50 per share. [BANNER]
One question comes to mind – since it is all about potential, not actual claims, why did all these law firms engage in the first place? It would appear that not a single shareholder has complained yet. And this is not a company in a bad financial situation. Assets top liabilities by $5 million, the net income for the first nine months of 2010 is not only a positive number, but 4 times better than the previous year.
Essentially, it seems that EnergyConnect seems quite appealing to new investors, but an issue also could appear regarding current ones. Yet, while overall uncertainty prevails up-to-date, one thing is clear – the days to come would be one if intense actions and sharp movements on the stock market.
