Babcock & Wilcox (BW) told investors it had landed a transformational AI data-center power deal worth over $1.5 billion. Then that story got even bigger, with executives upgrading it to a $2.4 billion contract and calling it proof of massive demand. According to the complaint, key facts about the deal’s structure and economics were allegedly omitted from the market.
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A federal securities complaint filed in Ohio alleges that Babcock & Wilcox inflated its stock price by touting a major AI data center deal without disclosing that its largest shareholder allegedly stood on both sides of the transaction and that omitted facts allegedly called into question the deal’s economics and B&W’s ability to recognize the touted revenue.
A securities lawsuit was filed on April 14, 2026, in the United States District Court for the Northern District of Ohio against Babcock & Wilcox Enterprises, Inc. (“B&W”) and two of its senior executives. The complaint alleges that shareholders who purchased B&W securities between November 5, 2025, and March 11, 2026, were harmed by a series of materially false and misleading statements. Following a short-seller report published on March 12, 2026, B&W’s stock price fell by $1.71 per share, or approximately 11.59%, to close at $13.05. The complaint names Kenneth M. Young, Chairman and CEO, and Cameron Frymyer, Executive Vice President and CFO, as individual defendants, along with the company.
If you purchased B&W securities during the class period and suffered losses, you may want to learn more about your potential legal options.
Babcock & Wilcox: An Industrial Power and Emissions Solutions Provider
Babcock & Wilcox Enterprises, Inc., based in Akron, Ohio, operates in the energy and emissions-control sector through its subsidiaries and serves a range of industrial, utility, and municipal customers in North America, Europe, and Asia. Its securities trade on the New York Stock Exchange, including common shares under BW, senior notes under BWNB, and preferred shares under BW PRA.
According to the complaint, BRC Group Holdings, previously known as B. Riley Financial, was B&W’s largest shareholder during the relevant period. The pleading also identifies Bryant R. Riley as a senior BRC leader and board chair, and ties that relationship to the alleged omissions at issue.
Alleged Omissions at the Heart of the Investor Claims
At the center of the case are two announced AI power-related agreements: an initial limited-notice-to-proceed agreement and a later design-build agreement. The complaint alleges that B&W highlighted the size of those opportunities, first at more than $1.5 billion and later at $2.4 billion, while failing to tell investors about the alleged relationship between its largest shareholder and the counterparty involved in the later deal.
The complaint also claims that Applied Digital’s existing circumstances undermined the need for the power-generation work B&W said it expected to perform. It further alleges that investors were not told that Applied Digital had mechanisms to terminate its guarantee obligations under certain conditions, including by making a payment as low as $50 million. In the plaintiff’s telling, those omitted facts distorted the market’s view of the deal’s revenue significance and B&W’s prospects during the class period.
Follow this case for ongoing developments that may affect shareholders who held B&W securities during the alleged class period.
What Executives Told the Market During the Class Period
According to the complaint, on November 4, 2025, CEO Kenneth Young described the limited notice to proceed as having a “profound” impact on the company’s pipeline, stating it added over $3 billion to the pipeline and brought the total global pipeline to over $10 billion. Young also told investors that the eventual contract, “when contracted, would serve as upside” to the company’s projected 2026 adjusted EBITDA range of $70 million to $85 million.
During B&W’s Q3 earnings call on November 10, 2025, Young indicated that the project would be valued at over $1.5 billion upon completion and that B&W could recognize between 10% and 15% of that amount in fiscal year 2026. CFO Cameron Frymyer told investors on the same call that, despite an earlier announcement pausing an at-the-market stock offering, the company had decided to resume sales under that program. On March 4, 2026, Young touted the $2.4 billion full notice to proceed as further underscoring the company’s strategic role in the AI data center space and cited a 470% increase in backlog compared to the end of 2024.
How the Alleged Truth Came to Light
The complaint points to March 12, 2026, as the key corrective date, when Wolfpack Research released a short report challenging the structure and disclosures surrounding the transaction. As summarized in the complaint, Wolfpack said investors had not been told that Bryant Riley served as a director of Base Electron and that Base Electron’s listed address matched BRC’s headquarters instead of Applied Digital’s. The report also highlighted that Base Electron’s incorporation documents were filed on December 23, 2025, weeks after the earlier limited notice to proceed had been announced.
The complaint further recounts Wolfpack’s position that Applied Digital’s data center projects already had access to conventional grid power, and that statements made in local government settings suggested those projects were expected to rely on existing grid arrangements rather than newly built power plants. After the report was published, B&W shares fell $1.71, or 11.59%, to close at $13.05 on March 12, 2026, according to the complaint.
Why This Case May Matter to B&W Shareholders
In broad terms, the lawsuit contends that B&W investors paid inflated prices because the market was missing important context about the announced power agreements. The plaintiff says that the undisclosed relationship between BRC and the counterparty, the alleged questions surrounding Applied Digital’s need for the project, and the limited scope of Applied Digital’s guarantee exposure together painted a more secure picture of the opportunity than the omitted facts allegedly warranted.
The complaint also highlights a February 2026 stock sale disclosed by BRC and related parties, which involved BRC’s entire directly held common-stock position and was valued at roughly $10.4 million. The pleading says Wolfpack pointed to that sale as part of its theory that the transaction may have served to support BRC’s ability to monetize B&W shares at higher prices.
Federal Securities Laws Invoked in the Complaint
The suit brings federal securities claims under Section 10(b) of the Exchange Act and Rule 10b-5, and also includes a Section 20(a) control-person claim against the individual defendants. In essence, the complaint alleges that investors were misled by statements and omissions concerning B&W’s business outlook and the significance of the announced agreements.
The filing asks the court to certify a class and award damages and other relief for investors who bought or otherwise acquired B&W securities during the proposed class period.
Investors who purchased B&W securities during the class period and wish to learn more about their rights in connection with this lawsuit may want to seek legal guidance.
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