Groupon IPO Scandal Is the Sleaze That’s Legal

April 5 (Bloomberg) -- Here’s an unsettling fact for anyonethinking of ever buying shares in a newly public company: Evenif its executives know their internal accounting systems are awreck, they aren’t required to disclose this until after thecompany goes public.

It is a lesson that Groupon Inc. shareholders have learnedthe hard way. Groupon shares fell 17 percent on Monday, afterthe online coupon company said late last week that it hadidentified a “material weakness” in its internal controls overfinancial reporting, as of Dec. 31. The Chicago-based companyalso revised its fourth-quarter results to show lower revenueand a larger loss, after finding errors in its accounting forcustomer refunds. At $14.54, the stock now sells for 44 percentless than it did after the first day of trading.