CASES
Diamond Foods, Inc.
Class Period: Apr 5, 2011 to Nov 1, 2011
Lead Plaintiff Deadline: Jan 6, 2012 + Deadline passed
Summary of Case:
A securities class action has been filed against Diamond Foods, Inc. ("Diamond Foods" or the "Company") on behalf of purchasers of Diamond Foods' securities between April 5, 2011, and November 1, 2011. This case has been filed in the USDC - California (Northern).
The Complaint alleges that On April 5, 2011, the Company announced that it was going to acquire the Pringles snack business (the "Acquisition") from The Procter & Gamble Company ("P&G"). The Company represented to investors that the Acquisition would be completed by December 2011.
According to media reports, on or around September 25, 2011, an equity research firm for hedge funds named Off Wall Street Consulting Group issued a report questioning Diamond Foods' accounting practices with respect to walnut purchases. Thereafter, on September27, 2011, The Wall Street Journal published an article noting that as walnut prices surged for the 2010 crop, Diamond Foods actually paid growers much less than most buyers. Further, the article disclosed that on September 2, 2011, after the close of the Company's 2011 fiscal year (July 31, 2011), the Company made an unusual extra "momentum" payment to growers that growers had not received in past years. According to the article, that payment would significantly impact the Company's 2011 fiscal year financial results had it been made by July 31, 2011. The article estimates that the "momentum' payments could total as much as $50 million, which if made prior to July 31,2011, would have substantially reduced the Company's $93 million in operating income that it had previously
reported for the entire 2011 fiscal year. 6. On this news, shares of Diamond Foods declined $5.11 per share, or about 5.65%, to close on September 26, 2011, at $85.26 per share, on unusually heavy trading volume, and shares of Diamond Foods further declined $3.20 per share, or 3.75%, to close on September 27, 2011, at $82.06 per share, also on unusually heavy trading volume. On November 1, 2011, the Company disclosed that the Acquisition would be delayed until the first half of 2012. The Company revealed that the delay was the result of an internal investigation regarding payments to walnut growers. According to the Company, the investigation was prompted by the Chairman of the Audit Committee of the Company's Board of Directors receiving an external communication regarding Diamond's accounting for certain crop payments to walnut growers.
On this news, the Company's shares declined $11.33 per share, or 17.67%, to close on November 2, 2011, at $52.79 per share, on unusually heavy trading volume. The complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, Defendants made false and/or misleading statement, and/or failed to disclose: (1) that the Company was underestimating the ultimate price to be paid to walnut growers; (2) that the Company was improperly accounting for its cost of sales; (3) that, as a result, the Company's financial results were overstated; (4) that the Company lacked adequate internal and financial controls; (5) that, as a result of the foregoing, the Company's financial statements were materially false and misleading at all relevant times; and (6) that, as a result of the foregoing, the Company's positive statements about Diamond Foods' business, operations, and prospects, as well as those regarding the timetable for the Acquisition, lacked a reasonable basis.
If you purchased this company's shares during the Class Period and suffered a loss or for further information about the case, please review the links below.