Throughout the year, macroeconomic considerations have been an important factor in the number of securities class action lawsuit filings, including economic inflation, and supply chain and labor supply disruption. Another important factor has been rising interest rates, which, among other things contributed to several high-profile bank failures earlier this year, and which in turn led to the filing of follow-on securities suits.

In the latest example of macroeconomic factors affecting businesses and translating into a securities class action lawsuit filing, a plaintiff shareholder has filed a securities class action lawsuit against the standby power generator company, Generac Holdings, after the company announced that declining consumer spending due to rising interest rates caused the company second quarter 2023 revenues to fall below expectations. A copy of the November 21, 2023, complaint can be found here.


Generac designs and builds standby power generators for homes and businesses. In the company’s May 3, 2023, earning call, the company reported that its year-over-year sales and earnings had declined. The company’s CEO and CFO nevertheless gave investors an optimistic outlook, suggesting that the company’s residential sales would improve in the year’s second half, and, according to the subsequent securities suit complaint, gave investors “the impression that Generac’s sales should remain steady in spite of worsening conditions in the U.S. and abroad.”

On August 2, 2023, when the company held its second quarter 2023 earnings call, the company reported what the subsequent complaint called “lackluster results,” including that net sales had decreased 23% year-over-year and that residential sales had decreased 44%. The company’s CEO said that sales of residential products “were lower than expected as a result of a softer consumer spending environment that impacted shipments of home standby generators.” The company also said that it now expected the weakened consumer spending environment to persist in the second half of the year.

In response to questions about lower-than-expected consumer demand, the CEO attributed the decrease to “the work that the Federal Reserve is doing to tamp down inflation with higher rates.” According to the subsequently filed securities class action lawsuit, the company’s share price declined more than 27% on the news.

On November 21, 2023, a plaintiff shareholder filed a securities class action lawsuit in the Western District of Wisconsin against Generac, its CEO, and its CFO. The complaint purports to be filed on behalf of the investors who purchased Generac securities between May 3, 2023, and August 3, 2023. The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint seeks to recover damages on behalf of the class.


The higher interest rates that have prevailed since the Fed began raising interest rates in March 2022 are affecting all aspect so the economy and, as this case illustrates, are affecting the operating environment and financial results for many businesses. The impact is easier to discern in interest-rate sensitive businesses, such as banks and other financial institutions, as well as residential and commercial real estate. The effects are harder to measure (and to predict) when it comes to businesses whose revenues depend on consumer sentiment; as this case shows, businesses that are susceptible to changes in consumer sentiment can also experience significant effects on their operations and financial results when rising interest rates undercut consumer demand.

This case by itself arguably is unremarkable; it has all the earmarks of the classic “stock drop” lawsuit. It is nevertheless instructive because it highlights how the heightened interest rate environment can put pressure on business and even undercut their financial performance.

As we head into 2024, the likelihood is that these kinds of economic forces will continue to pressure businesses and continue to affect the businesses’ financial results as well. In at least some cases, the impact of these forces will translate into securities class action litigation as well. My expectation is that the various macroeconomic factors operating in the business environment will continue to contribute to securities class action lawsuit frequency next year.

One thing I will say about this lawsuit is that when the day comes for the sufficiency of the allegations in the complaint to be tested, the court will have to look long and hard to find anything that even arguably would satisfy the plaintiffs’ obligation to plead scienter.