Groupon Sued by Investor Claiming Securities Law Violation
A Groupon Inc. (GRPN) shareholder sued the deal-of-the-day coupon company, claiming that its officers, directors and underwriters misled investors about its business performance prior to its initial public offering.
The company reported a “material weakness” in its financial controls on March 30 and said its first reported quarterly sales as a publicly-traded company were lower than previously stated because of higher refunds to merchants, reducing revenue in the quarter $14.3 million, to $492.2 million.
“Groupon’s internal controls were so poor and inadequate that Groupon’s reported results were not reliable,” investor Fan Zhang alleged in a complaint filed today in federal court in Chicago.
Zhang seeks class-action -- or group -- status on behalf of anyone who bought Groupon stock from Nov. 4 to March 30, and an award of unspecified money damages. Zhang owned as many as 3,000 shares from Feb. 9 to March 6, bought for as much as $21.75.
Groupon made its IPO on Nov. 3. Shares peaked at $26.19 on Nov. 18 and closed today at $15.02, its lowest price since the IPO. The company is based in Chicago.
Also named as defendants in the complaint are Chairman and co-founder Eric Lefkofsky, vice chairman Theodore Leonsis, co- founder and Chief Executive Officer Andrew Mason, six members of its board of directors and IPO underwriters including Goldman Sachs & Co. and Morgan Stanley (MS) & Co.
Julie Mossler, a spokeswoman for Groupon, said the company doesn’t comment on pending litigation.
The case is Zhang v. Groupon Inc., 12cv2450, U.S. District Court, Northern District of Illinois (Chicago).
To contact the reporter on this story: Andrew Harris in Chicago at firstname.lastname@example.org.