Babcock & Wilcox Enterprises [BW] Securities Class Action Lawsuit Update

• Case Name: Cho v. Babcock & Wilcox Enterprises, Inc., et al.
• Case No.: 5:26-cv-00886
• Court: United States District Court, Northern District of Ohio
• Filing Date: April 14, 2026
• Class Period: November 5, 2025 - March 11, 2026, inclusive.

Introduction

On April 14, 2026, a federal securities class action was filed in the United States District Court for the Northern District of Ohio against Babcock & Wilcox Enterprises, Inc. (NYSE: BW) and two of its top executives, Chairman and CEO Kenneth M. Young and Executive Vice President and CFO Cameron Frymyer, on behalf of investors who purchased or acquired BW securities between November 5, 2025 and March 11, 2026.

At the heart of the lawsuit is a story about a deal that appeared to transform a nearly 160-year-old energy technology company into a major player in the booming AI data center power market. After the market closed on November 4, 2025,

Defendants announced a preliminary agreement, a "limited notice to proceed," to deliver over $1.5 billion worth of power generation infrastructure for an Applied Digital AI factory. The market devoured the narrative. Shares surged over 198% in three months, climbing from $3.74 to $11.15. Defendants seized the moment, launching an at-the-market offering that raised $67.5 million virtually overnight, while CEO Young proclaimed the deal's impact "profound" and pointed to a pipeline exceeding $10 billion. When the contract was formalized in March 2026 at an even larger $2.4 billion, shares jumped another 45% in a single session.

The complaint alleges that the celebratory narrative concealed critical facts. On March 12, 2026, short seller Wolfpack Research published a report alleging that B&W's counterparty, Base Electron, was not an independent entity "founded by the team at Applied Digital" as Defendants had represented, but rather an entity that Wolfpack alleged was not independent and whose directors included Bryant R. Riley, the Co-CEO and Chairman of BRC Group Holdings, B&W's own largest shareholder. Base Electron's registered address matched BRC's headquarters, not Applied Digital's, and the entity had not even been incorporated until weeks after the preliminary agreement was signed. Wolfpack further alleged that Applied Digital did not actually need the power B&W was supposed to supply, and that the deal's "ultimate purpose" may have been to provide exit liquidity for BRC, which had already sold its entire directly-held position in B&W stock at a 140% premium. Following the report, B&W shares fell $1.71, or 11.59%, to close at $13.05.

Backdrop and Business Context

Babcock & Wilcox traces its origins to 1867, when George H. Babcock and Stephen Wilcox Jr. founded the company in Providence, Rhode Island to commercialize a patented water-tube boiler design that promised safer, more efficient steam generation. The company's boilers powered Thomas Edison's Pearl Street Station in 1882, launching the era of commercial electricity. Over the next century and a half, B&W evolved into a global energy technology provider, passing through ownership by McDermott International in 1978 before spinning off its power generation business as Babcock & Wilcox Enterprises, Inc. in July 2015, listing on the NYSE under the ticker BW.

Today, headquartered in Akron, Ohio, B&W provides energy and emissions control solutions to industrial, utility, and municipal customers across more than 90 countries. The company generates revenue through steam generation equipment, waste-to-energy systems, environmental abatement technologies, and a substantial aftermarket parts and services business.

For fiscal year 2025, B&W reported annual revenue of $587.7 million, a modest 1.2% increase from the prior year, alongside adjusted EBITDA of $43.7 million, more than double the 2024 figure.

Before the events at issue, B&W had disclosed refinancing and liquidity risks tied to its 2026 notes, providing context for the significance the Company placed on large new contracts. It was against this backdrop, according to the complaint, that Defendants aggressively promoted the Power Generation Contract with Base Electron as a transformational catalyst, while allegedly concealing that the company's own largest shareholder was deeply intertwined with the counterparty on the other side of the deal.

Promises Made vs. Reality

The allegedly misleading statements began with a series of announcements in early November 2025. On November 4, B&W issued a press release revealing that it had signed a limited notice to proceed for a project "valued at over $1.5 billion" to deliver one gigawatt of power for an Applied Digital AI factory, with full contract release anticipated in the first quarter of 2026. That same day, in the Q3 Earnings Release also issued during post-market hours, CEO Young told investors the deal's impact on B&W was "profound, adding over $3 billion to our pipeline which brings our total global pipeline to over $10 billion," characterizing it as "an exciting and transformational opportunity" that demonstrated the company's nearly 160-year legacy of steam generation expertise.

Young went further during the November 10, 2025 earnings call, assuring analysts that B&W's scope on the project would represent the full $1.5 billion value, encompassing boilers, steam turbines, and construction, and that "the total value could be higher depending on final scope." When pressed on revenue recognition, Young estimated that "maybe 10%, 15% of the value" could be realized in fiscal year 2026, characterizing the project as "complete upside and probably significant upside" to the guidance Defendants had provided, which projected $70 million to $85 million in adjusted EBITDA from the core business and excluded any AI data center projects. CFO Frymyer reinforced the message, confirming the EBITDA guidance excluded any data center impact and then announcing, despite a prior commitment to pause the at-the-market offering after raising $67.5 million in just two days, that B&W would resume selling shares "opportunistically based on market conditions."

The crescendo arrived on March 4, 2026, when B&W announced it had "received full notice to proceed on a $2.4 billion design-build agreement with Base Electron, an independent power producer ('IPP') backed by Applied Digital," describing Base Electron as "a newly formed independent power producer that was founded by the team at Applied Digital." Young proclaimed the contract "further underscores the strategic role B&W plays in supporting the rapidly expanding power needs of large-scale AI data centers." The Q4 Earnings Release trumpeted a backlog surge of 470% to $2.8 billion, with Young citing "strong global demand" for B&W's technologies and a pipeline exceeding $12 billion. None of these announcements disclosed that BRC Group Holdings, B&W's largest shareholder, had deep ties to Base Electron, including that BRC's Co-CEO and Chairman Bryant Riley sat on Base Electron's board, that Base Electron's registered address matched BRC's headquarters, or that Base Electron had not even been incorporated until December 23, 2025, seven weeks after the original preliminary agreement was announced. Nor did Defendants disclose that Applied Digital could unilaterally terminate its guarantee of Base Electron's obligations for as little as $50 million, a fraction of the $2.4 billion headline figure.

As alleged in the complaint, Defendants' public statements were materially false and misleading because they omitted that B&W's largest shareholder stood on both sides of the Power Generation Contract, that Applied Digital did not need the products and services B&W would purportedly supply, and that these undisclosed facts called into serious question whether B&W would ever recognize revenues from the agreements that had become the centerpiece of its turnaround narrative.

Timeline of Alleged Misconduct and Disclosures

Class Period: November 5, 2025 -- March 11, 2026, inclusive

• November 4, 2025 (post-market): B&W announces limited notice to proceed for a project "valued at over $1.5 billion" to deliver one gigawatt of power for an Applied Digital AI factory. Simultaneously issues Q3 Earnings Release; CEO Young calls the deal's impact "profound," stating it adds "over $3 billion" to the pipeline, bringing the total global pipeline to "over $10 billion." B&W enters into ATM Offering sales agreement with BRC and Lake Street Capital Markets for up to $200 million in common stock.

• November 5, 2025: Class Period begins. BW shares rise $1.06, or approximately 22.1%, to close at $3.74. Defendants file Prospectus on Form 424B5 in connection with ATM Offering.

• November 7, 2025: B&W announces $67.5 million raised through ATM Offering in just two days, "including approximately $50 million from a single fundamental global institutional investor." States it will "pause" further sales. Young touts B&W's "significant project pipeline."

• November 10, 2025: B&W files 10-Q for Q3. During earnings call, Young estimates 10% to 15% of the $1.5 billion project value could be recognized in fiscal year 2026, representing "significant upside" to guidance. CFO Frymyer announces reversal of ATM Offering pause, stating B&W will resume sales "opportunistically."

• December 23, 2025: Base Electron's articles of incorporation are filed. The counterparty to the eventual Power Generation Contract did not exist when the preliminary agreement was announced.

• February 3, 2026: BW shares reach $11.15, representing a rise of over 198% from the pre-rally level before Defendants’ post-market November 4, 2025 announcements.

• February 11, 2026: BRC Group Holdings, B&W's largest shareholder, files Form 4 disclosing sale of its entire directly-held position in BW common stock, valued at approximately $10.4 million, executed at $9 per share (140% above the November 4, 2025 close).

• March 4, 2026: B&W announces full notice to proceed on $2.4 billion design-build agreement with Base Electron, described as "a newly formed independent power producer that was founded by the team at Applied Digital." Files Form 8-K disclosing that only approximately $434 million of the $2.4 billion was a fixed fee. Issues Q4 Earnings Release touting 470% backlog increase to $2.8 billion and pipeline exceeding $12 billion. None of these disclosures reveal BRC's ties to Base Electron. BW shares rise $3.70, or 45%, to close at $11.80.

• March 4, 2026: Applied Digital's own 8-K uses conditional language, stating B&W would be "potentially supplying power" and discloses that Applied Digital could terminate its guarantee of Base Electron's obligations for as little as $50 million.

• March 12, 2026 (Corrective Disclosure): Wolfpack Research publishes short report alleging undisclosed relationship between BRC and Base Electron, including that BRC's Co-CEO Riley is a Base Electron director, that Base Electron shares BRC's headquarters address, and that Applied Digital does not need B&W's products. BW shares fall $1.71, or 11.59%, to close at $13.05.

Investor Harm and Market Reaction

The corrective disclosure on March 12, 2026 inflicted immediate damage on investors. Following publication of the Wolfpack Research report, BW shares plunged $1.71 per share, or 11.59%, to close at $13.05. This single-day decline erased substantial shareholder value and punctured the narrative that had propelled the stock upward for months.

The magnitude of the loss becomes clearer in the context of the Class Period's price trajectory. BW shares had closed at $3.74 on November 5, 2025, the first day of the Class Period, following the previous days post-market announcements of the Power Generation LNTP and Q3 results. Over the next three months, fueled by the alleged misrepresentations about the deal's scope, value, and the independence of B&W's counterparty, shares climbed over 198% to reach $11.15 by February 3, 2026. The March 4, 2026 announcement of the formalized $2.4 billion contract sent shares surging another 45% in a single session to $11.80. Shares continued to rise in subsequent trading days, reaching the level from which the March 12 correction occurred. Investors who purchased or acquired BW securities during the Class Period, including those who bought on the strength of the March 4 contract announcement, allegedly suffered significant losses and damages as a result of the precipitous decline in the market value of the Company's securities. The Wolfpack report's revelations about BRC's undisclosed role on both sides of the transaction, the questionable independence of Base Electron, and the fragility of Applied Digital's guarantee fundamentally altered the market's assessment of the deal's viability and, by extension, B&W's backlog, pipeline, and financial outlook.

SEC Filings & Risk Factors

The complaint identifies a pattern of affirmative misrepresentations across multiple SEC filings and public statements during the Class Period, while critical facts about the Power Generation Contract's counterparty and structure went undisclosed. The ATM Offering Prospectus filed on Form 424B5 on November 5, 2025 was issued in direct connection with the Power Generation LNTP announcement, and Defendants explicitly linked the capital raise to the deal. The November 7, 2025 ATM Offering Release stated that the $67.5 million raise "closely follows" the LNTP with Applied Digital. The filing enabled B&W to sell up to $200 million of common stock to the public based on a narrative built around a contract whose counterparty relationships Defendants allegedly concealed.

The Q3 Form 10-Q filed on November 10, 2025 provided further financial detail on the quarter's results and served as the backdrop for the earnings call in which CEO Young estimated that 10% to 15% of the projected $1.5 billion project value, characterized in the complaint as between $100 million and $225 million in revenue, could be recognized in fiscal year 2026.

The filing did not disclose any connection between BRC Group Holdings and B&W's prospective counterparty, nor did it identify any risks associated with the involvement of B&W's largest shareholder on both sides of the transaction.

The March 4, 2026 Form 8-K concerning the formalized Power Generation Contract disclosed that of the $2.4 billion headline value, only approximately $434 million represented a fixed fee; the remaining $1.96 billion consisted of variable charges based on work performed and other amounts the Company declined to specify for five weeks. The 8-K described Base Electron as "founded by the team at Applied Digital" without disclosing that BRC Co-CEO Riley was a Base Electron director, that Base Electron's registered address was BRC's headquarters, or that Base Electron had been incorporated only on December 23, 2025, weeks after the original LNTP was announced. Applied Digital's own 8-K, filed the same day, used materially more conditional language and disclosed that its guarantee could be terminated for as little as $50 million.

The Q4 Earnings Release, also issued March 4, 2026, highlighted the $2.4 billion contract as driving a 470% increase in backlog to $2.8 billion, with CEO Young characterizing results as evidence of "strong global demand" for B&W's technologies. This release similarly omitted the BRC-Base Electron relationship.

Taken together, the complaint alleges that Defendants' filings painted a picture of robust, arms-length commercial demand for B&W's products in the AI data center market, while omitting the alleged relationship between B&W’s largest shareholder and the counterparty. The omission of this related-party dimension was material because it allegedly raised questions about the parties’ intent in entering the agreements and whether B&W was likely to recognize revenue from them.

Litigation & Procedural Posture

The complaint asserts claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder against all Defendants, and under Section 20(a) of the Exchange Act against the Individual Defendants as controlling persons of B&W.

Defendants:

Babcock & Wilcox Enterprises, Inc.: Issuer Kenneth M. Young: Chairman and Chief Executive Officer Cameron Frymyer: Executive Vice President and Chief Financial Officer

Scienter allegations center on Defendants' knowledge of and access to the material facts they allegedly concealed. The complaint alleges Defendants had actual knowledge of the close relationship between BRC Group Holdings and Base Electron, yet repeatedly touted the $2.4 billion contract's value without disclosing that B&W's largest shareholder stood on both sides of the transaction. The complaint further alleges that defendants benefited from the ATM Offering by enabling B&W to raise $67.5 million and then resume selling shares into the market. BRC's sale of its entire directly-held BW position at a 140% premium, executed while the alleged misrepresentations were ongoing, further supports the motive element. No confidential witnesses are cited at this stage of the litigation.

Procedurally, the case was filed on April 14, 2026 and is in its earliest stages. Lead plaintiff submissions are due June 15, 2026. Class certification has not yet been ruled on. The class is defined as all persons and entities, other than Defendants, who purchased or otherwise acquired BW securities during the Class Period and were damaged upon the revelation of the alleged corrective disclosures.

How to Join the Babcock & Wilcox Enterprises, Inc. (BW) Class Action

• Confirm you purchased BW securities between November 5, 2025 and March 11, 2026
• Review the complaint allegations and claimed losses
• Click here to check eligibility

Disclaimer: This shareholder alert is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for personalized guidance. Prior results do not guarantee a similar outcome.