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id: 732, Created by Stan Vick, Scout
Norfolk Southern (NSC) Senior Notes Holders Misleading Case
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S.D. New YorkCourt
04 Feb 2021Class period Start
16 May 2023Class period End
- Norfolk Southern trains derailed several times, causing damages.
- The National Transportation Safety Board is investigating.
- $NSC lost over $1B of its market capitalization.
- Investors suspect Norfolk of misleading statements.
On March 4, 2023, the Norfolk Southern (NSC) cargo train derailed close to Springfield, Ohio, causing 28 of the train's 212 cars to come off the tracks. The National Transportation Safety Board reacted by announcing that an investigation would commence.
Earlier, on February 3, 2023, in East Palestine, Ohio, a Norfolk Southern (NSC) train derailed, causing the release of hazardous materials and flammable liquids, and leading to the controlled burning of toxic substances. This incident resulted in the evacuation of residents from the surrounding area. As a consequence, Norfolk Southern is facing multiple lawsuits and investigations from regulators and affected parties.
Investors in Senior Notes offerings conducted by the Company on or around August 18, 2020, May 3, 2021, August 16, 2021, February 15, 2022, June 2, 2022, and January 26, 2023, have reasons to suspect the Company, its Leaders and Advisors of misleading statements and failing to disclose important information in offering documents, specifically because the Offering Materials touted the Company’s focus on safety and environmental protection while failing to disclose the following adverse facts that existed at the time of the Offerings that were later disclosed to the public:
- the PSR strategy had led to increased train derailments and an increased risk of future derailments;
- the PSR strategy was part of a culture of increased risk-taking at the expense of reasonable safety precautions due to the Company’s near-term focus on profits;
- the Company was more vulnerable to train derailments;
- Norfolk Southern’s capital spending and replacement programs were designed to prioritize profits over the Company’s ability to provide safe, efficient, and reliable rail transportation services;
- the Company’s lobbying efforts had undermined its ability to provide safe, efficient, and reliable rail transportation services;
- the PSR strategy undermined worker safety and the Company’s purported “commitment to an injury-free workplace” because the Company’s PSR plan prioritized reducing expenses through fewer personnel, longer trains, and less spending on safety training, technology, and equipment;
- the PSR strategy rendered Norfolk Southern more susceptible to accidents that could cause serious economic and bodily harm; and
- the Company failed to put in place responsive practices and procedures to minimize the threat to communities in the event that these communities suffered the derailment of a Norfolk Southern train carrying hazardous and toxic materials.
The undisclosed adverse facts and circumstances detailed above made an investment in the Senior Notes speculative or risky, and presented known trends, uncertainties, and risks that required disclosure in the Offerings Materials which were not disclosed, including adverse trends and risks related to the safety of Norfolk Southern’s operations.
Failure to Disclose,
Shock Event Date
16 May 2023
16 May 2023
Lead Plaintiff Deadline
15 July 2023
Hon. Lewis A. Kaplan