LAWSUITS NEWS & LEGAL INFORMATION
Diamond Foods, Inc DMND Securities Stock Fraud
|Company:||Diamond Foods, Inc|
|Class Period:||Apr-15-11 to Nov-1-11|
|Lead Plaintiff Deadline:||Jan-6-12|
|Court:||Northern District of California|
Diamond Foods engages in processing, marketing and distributing snack products. Diamond Foods enters into exclusive purchase agreements with walnut growers for their crops. According to the Company, under these agreements, the walnut growers deliver their entire walnut crop to the Company during the fall harvest season and the Company then determines the minimum price for the crops by March 31, or later, of the following calendar year. The Company represents that it determines the purchase price in good faith, taking into account market conditions, crop size, quality, and nut varieties, among other relevant factors. Since the ultimate price to be paid by the Company to the walnut growers is determined subsequent to receiving the walnut crop, the Company estimates the cost of the walnuts for its interim financial statements.
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.
The Complaint alleges that throughout the Class Period defendants made false and/or misleading statements 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.
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 Foods' 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.
If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.
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Published on Nov-8-11
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