A U.S. institutional investor sued Textron Inc
The suit, which seeks class-action status for investors who bought Textron shares from January 17, 2007 through January 29, 2009, says the Providence, Rhode Island-based company inflated its order backlog by taking orders for jets from customers who could not pay for them.
It also says that company executives illegally profited by selling shares whose prices rose because of Textron's claims.
Textron spokesman Michael Maynard declined to comment on the suit filed in the U.S. District Court in Rhode Island by the City of Roseville Employees' Retirement System.
Textron was accepting orders for business jets from a growing number of customers that were mere start-up and/or financially distressed fleet operators who neither intended to, nor possessed the financial resources to, pay for or take delivery of aircraft, the suit contends.
The suit also names Textron Chief Executive Lewis Campbell and former Chief Financial Officer Ted French as defendants.
Roseville is located in Michigan, the group's lawyer Barry Kusinitz said.
Textron shares have lost about 66 percent of their value in the past year, a deeper drop than the 34 percent fall of the Standard & Poor's capital goods industry index <.GSPIC>, as earnings tumbled due to falling demand for light jets and troubles at its finance arm.
Shares of the company, which also makes Bell helicopters and EZ-GO golf carts, were up 1.09 percent at $14.84 on the New York Stock Exchange.
The case is City of Roseville Employees' Retirement System v. Textron Inc in U.S. District Court in Rhode Island, case number 1:09-cv-00367.
(Reporting by Scott Malone. Editing by Robert MacMillan)