Groupon Draws SEC’s Eye, Forks Out $8.5 Million To Settle String Of Lawsuits
Late on Friday, Groupon issued a press release revising its earnings report, which was initially released in February. As previously reported, lawyers immediately started seeking complaints against the company.
In fact, one press release from law firm Federman & Sherwood came out yesterday afternoon, saying:
The law firm of Federman & Sherwood, a nationwide law firm specializing in securities, derivative and merger litigation, has initiated an investigation into Groupon, Inc. (NASDAQ: GRPN) with respect to possible breaches of fiduciary duty by the company’s officers and directors, as well as violations of state law. More specifically, the company and its auditor found material weaknesses with the company’s reported revenue and earnings for the fourth quarter 2011, and therefore may have misstated earnings and revenue in its Annual Report. There is also speculation that the officers and directors of the company “rushed” the initial public offering.
If you purchased Groupon, Inc. shares between the IPO date of November 4, 2011 and March 31, 2012, have information to assist in our investigation, or have any questions or concerns regarding this notice or preservation of your rights, please contact our firm.
That’s just a sampling of a greater number of such releases, according to reports.
The Wall Street Journal is now reporting that the Securities and Exchange Commission is now involved. According to the publication, there has not been a formal investigation launched yet, but a probe is in a preliminary stage, which may or may not lead to a bigger investigation.
The revisions included a $14.3 million reduction in Q4 revenue, which was originally reported as $506.5 million, up 194% year-over-year.Operating expenses were also increased, reducing operating income by $30 million, net income by $22.6 million and earnings per share by $0.04.
CFO Jason Child said in the announcement, “We remain confident in the fundamentals of our business, as our performance continues to highlight the value that we provide to customers and merchants.”
Meanwhile, Groupon has agreed to an $8.5 million settlement in a string of suits related to expiration dates on deals. This, according to Reuters, settles 17 suits in all.