Shareholder Sues Groupon Over Loss Reporting Scandal
Lastest News Headlines:
Get Breaking News First
CHICAGO (CBS) — Another Groupon shareholder has filed a lawsuit against the Chicago-based daily deal Web site company.
As WBBM Newsradio’s David Roe reports, the suit, filed by shareholder Theresa Monturano in U.S. District Court, accuses Groupon’s board of directors of breach of fiduciary duty and abuse of their control.
LISTEN: WBBM Newsradio’s David Roe reports
Groupon has been in the news a lot lately, after it reworked its fourth quarter financial statement to include lower profits.
Groupon originally disclosed fourth-quarter losses totaling about $37 million — but subsequent revision showed that number fell short of actual losses by more than $22 million.
Critics say the company has weak financial controls and faulty internal procedures.
The company’s troubles began to pile up within a week after news of the mistake broke.
The U.S. Securities and Exchange Commission launched an informal review of the revision, company stock plummeted to an all-time low and shareholder Fan Zhang filed a federal suit claiming the company “failed to disclose negative trends” that would have affected its IPO pricing of 35 million shares of common stock at $20 per share.
Shareholder Hansel Orrego also accused Chief Financial Officer Jason Child and Chief Accounting Officer Joseph Del Preto of insider trading in a suit filed in Cook County Circuit Court that claims the men were “intimately familiar” with the company’s financial health and “dumped millions of dollars worth of personally held Groupon common stock at artificially inflated prices.”
Monturano’s federal suit, filed exactly a week after Orrego’s, seeks a provision giving Groupon shareholders power to nominate three candidates for election to the company’s board, and asks for “all necessary actions” to reform corporate governance at Groupon.
Monturano also wants relief “in an amount necessary to punish individual defendants” and “make an example” of them to the public, according to the suit.
Chief Executive Officer Andrew Mason and Executive Chairman Eric Lefkofsky are listed as defendants in the suit, along with board members Bradley Keywell; Peter Barris; Kevin Efrusy; Mellody Hobson; Theodore Leonsis and Howard Schultz.
A Groupon representative could not be reached for comment.
The Sun-Times Media Wire contributed to this report.
(Source: Sun-Times Media Wire © Chicago Sun-Times 2012. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)