Key Takeaways:
Bleichmar Fonti & Auld LLP opened a securities fraud investigation into Tennant Company after its stock plunged 23% on ERP system failures.
"Tennant assured investors the project was progressing as anticipated and on time and on budget, but the North America rollout caused severe operational disruptions," Adam McCall, a partner at BFA Law, said.
On Feb. 24, Tennant disclosed it lost roughly $30 million in sales after its new enterprise resource planning system prevented the company from processing and shipping customer orders. The company said it would need to spend more than $20 million in 2026 to fix the issues, compared with the roughly $5 million it had planned. The stock fell $19.28 to close at $63.02, a 23.4% decline.
The investigation centers on whether Tennant misled investors about the ERP implementation, including calling the Asia-Pacific launch "successful" and claiming it had "mitigated disruptions and stabilized operations." Tennant, which manufactures industrial floor cleaning equipment for warehouses and commercial facilities, now faces potential class-action claims that could result in significant financial penalties.
The probe adds pressure on Tennant as it works to stabilize operations after the botched rollout. The company's market capitalization fell to about $1.07 billion following the Feb. 24 selloff, though shares have since recovered to around $87.53 as of late June, still below their 52-week high of $88.86.
BFA Law, which recovered more than $900 million from Tesla Inc.'s board and $420 million from Teva Pharmaceutical Industries Ltd., is representing investors on a contingency fee basis. The firm is seeking shareholders who purchased Tennant stock during the period when the company was making statements about the ERP system's progress.
The investigation suggests Tennant's ERP failures may have broader legal consequences beyond the operational and financial disruptions already disclosed. Investors will watch for any class-action filing and the company's Q2 2026 earnings report, expected in early August, for updates on remediation progress.
This article is for informational purposes only and does not constitute investment advice.
