April 3 (Reuters) - Groupon Inc, which runs the world's
largest online coupon website, was sued on Tuesday by a
shareholder who accused the company of misleading investors
about its financial prospects and concealing weak internal
Just four days ago, Groupon unexpectedly revised its results
for the fourth quarter, its first as a public company to a
bigger net loss and said it had a "material weakness" in its
internal controls, having failed to set aside enough money for
According to a complaint filed in federal court in Groupon's
hometown of Chicago, the company overstated revenue, issued
materially false and misleading financial results, and concealed
how its business was not growing as fast and was not nearly as
resistant to competition as it had suggested.
Julie Mossler, a Groupon spokeswoman, declined to comment.
The company has said it does not discuss pending litigation.
Several other law firms have said they may file similar
Groupon in November pulled off one of the largest Internet
IPOs of the past decade, valuing the company at the time at well
over $10 billion.
However, the leader in the fast-growing Internet daily-deals
space populated by rivals such as Amazon.com Inc and
LivingSocial was criticized by some analysts and investors for
aggressive accounting in the run-up to the IPO.
The complaint said Groupon did not reveal its "poor and
inadequate" internal controls, and concealed in its registration
statement and prospectus for its November 2011 initial public
offering that it did not comply with various countries' laws.
The lawsuit seeks class-action status on behalf of
shareholders who acquired Groupon shares between Nov. 4, 2011
and March 30, 2012.
Shares of Groupon, which lost 16.9 percent on Monday after
the company announced late Friday its results revision, fell 1.7
percent on Tuesday to close at $15.02. The stock is now roughly
25 percent below the $20 IPO price.
Among the other defendants are Groupon Chief Executive
Andrew Mason and several banks that helped take the company
public, including lead IPO underwriters Credit Suisse, Goldman
Sachs and Morgan Stanley.
The plaintiff is Fan Zhang, who said he paid nearly $61,800
for 3,000 Groupon shares in February, and sold them in March at
a loss of more than $9,000.
On March 29, Groupon agreed to an $8.5 million settlement of
nationwide litigation alleging the expiration dates on its
coupons are illegal.
The shareholder case is Zhang v. Groupon Inc, U.S. District
Court, Northern District of Illinois, No. 12-02450.
For Zhang: James Barz, at Robbins Geller Rudman & Dowd
(Reporting by Jonathan Stempel)
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