A class action lawsuit has been filed in the United States District Court, Northern District of California, gainst Diamond Foods, Inc. (Nasdaq: DMND) and certain of its officers on behalf of all persons or entities who purchased or otherwise acquired the securities of Diamond during the period from December 9, 2010 through and including November 4, 2011 (the "Class Period"), seeking to pursue remedies under the Securities Exchange Act of 1934 (the "Exchange Act"). This class action is brought under Sections 10(b) and 20(a) of the Exchange Act, 15 U.S.C. Sections 78j(b) and 78t(a); and SEC Rule 10b-5 promulgated thereunder by the SEC, 17 C.F.R. Section 240.10b-5.
The Complaint charges 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 failed to disclose that: (1) the Company overstated its earnings by improperly accounting for certain crop payments to walnut growers; (2) the Company's acquisition of Pringles snack business would be delayed; (3) that the Company lacked adequate internal and financial controls; and (4) that, as a result of the foregoing, the Company's financial results were materially false and misleading at all relevant times.
On November 1, 2011, after the market closed, the Company disclosed that the Chairman of the Audit Committee received an external communication regarding Diamond's accounting for certain crop payments to walnut growers, which the Company's Audit Committee is now investigating. As a result, the Company is delaying the acquisition of the Pringles snack business from The Procter & Gamble Company for at least six months. On this news, Diamond shares declined $11.33 per share, or more than 17.6%, to close at $52.79 per share on November 2, 2011.
On November 3, 2011, The Wall Street Journal reported, among other things, that the "investigation centers around the timing of a recent payment to walnut growers for their 2011 crop" and that at least one of the improper payments is estimated at $50 million. On this news, Diamond shares declined an additional $6.39 per share or 12% in two consecutive trading sessions, to close at $46.40 per share on November 4, 2011.
On November 5, 2011, Barron's published an article stating, among other things, that had the Company "properly booked costs for fiscal 2011... it would've earned as little as $1.14 a share," instead of the reported earnings for the fiscal year ended July 2011 of $2.61 per share, before noncash charges and expenses. On this news, the stock fell an additional $7.31 per share or nearly 16%, to close at $39.09 per share on November 7, 2011.
If you are a current shareholder and/or purchased your shares prior to December 9, 2010 or during the period of December 9, 2010 through and including November 4, 2011 and would like to discuss your options of exercising your rights as a shareholder, please contact us.
Please submit the following information so we can determine if you qualify for the suit. If you don't know all the specific details, partial information is also acceptable.