CASES
Green Mountain Coffee Roasters, Inc. (2011)
Class Period: Feb 2, 2011 to Nov 9, 2011
Lead Plaintiff Deadline: Jan 28, 2012 + Deadline passed
Summary of Case:
A securities class action has been filed against Green Mountain Coffee Roasters, Inc. ("GMCR" or the "Company") on behalf of itself and all other similarly situated persons or entities (the "Class") who purchased or otherwise acquired common stock issued by GMCR from February 2, 2011 through November 9, 2011, inclusive (the "Class Period") and common stock pursuant and/or traceable to a registered public offering conducted on or about May 5, 2011 This case has been filed in the USDC - District of Vermont.
The complaint alleges that, during the Class Period, certain of the Defendants systematically manipulated and strategically managed the Company's revenues. To do so, these Defendants used GMCR's key fulfillment vendor, M.Block & Sons ("MBlock"), as a captive warehouse to harbor excessively manufactured, expired, or otherwise unsold product. The fraudulent scheme at GMCR involved materially overstating the Company's revenues based on falsified sales orders -- including through sham inventory shipments -- for hundreds of millions of dollars in K-Cup and Keurig brewer products. GMCR booked "revenues" associated with these false sales orders and shipments as though they were real. These acts caused a ripple effect throughout the Company's financial statements, resulting in the material overstatement of multiple metrics on which investors and analysts relied, including the Company's profits, and inventory and product demand levels. Throughout the Class Period, GMCR also fraudulently overstated the Company's assets in proportion to its fictitious revenues by carrying the proceeds of dummy sales as assets on the Company's balance sheet.
On October 17, 2011, David Einhorn, a prominent activist investor, issued a comprehensive report, including witness testimonials by former GMCR and MBlock employees, disclosing GMCR's misconduct and questionable relationship with MBlock. As a result of revelations in Einhorn's presentation leaking into the market, the price of GMCR's shares fell approximately 10%, from a closing price of $92.09 on (Friday) October 14 to a close of $82.50 on October 17, on unusually heavy trading volume. On October 19, 2011, when Einhorn's presentation was more widely distributed, the price of GMCR common stock declined another 15%, from a closing price of $82.11 on October 18 to a closing price of $69.80 on October 19, on unusually heavy trading volume. Then, on November 9, 2011, GMCR shocked investors when it announced disappointing earnings results and skyrocketing inventory. On this news, GMCR's shares plummeted 40%, from a close of $67.02 on November 9 to a close of $40.89 on November 10, on extremely heavy trading volume.
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.