Kobe Accused of Falsifying Data on its Products

On May 29, 2013, Kobe Steel, Ltd. (KBSTY) launched a new business plan that was intended to make the company more efficient and profitable for sustained growth. Throughout the class period, Kobe maintained that the business plan was "making steady progress" and emphasized that the company fostered a culture of high ethical standards and was "highly sensitive to compliance issues." To the contrary, Kobe falsified data on its aluminum, copper, and steel products and sold products that failed quality control tests in violation of laws and regulations. On October 10, 2017, Reuters reported that several manufacturers had confirmed use of Kobe's affected products, and on October 13, 2017, several media outlets revealed that the number of impacted customers had more than doubled from the initial estimates of 200 customers. Since news of Kobe's troubles became public, the company's ADRs declined over 40% to close at $3.55 per ADR on October 13, 2017, and have yet to regain their value.