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Deadline Looms in Lawsuit Against Diamond Foods

Hagens Berman, a Seattle-based investor-rights class-action law firm, reminded investors Tuesday, Jan. 3, that only a couple of days remain before the Jan. 6 lead plaintiff deadline in a securities class action filed against Diamond Foods. Investors who purchased shares between Dec. 9, 2010, and Nov. 4, 2011 (the “class period”), with losses exceeding $500,000 are encouraged to call partner Reed R. Kathrein at 510-725-3000 or email the firm at [email protected].

On Nov. 1, 2011, Diamond Foods announced that it was postponing its acquisition of Pringles, which it had previously told investors would be completed by December 2011. The company said it postponed the acquisition in order to investigate possible improper accounting of payments to walnut growers. On this news, Diamond shares declined $11.33 per share, or more than 17.6 percent, to close at $52.79 per share on Nov. 2.

On Nov.3, The Wall Street Journal reported 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 percent, in two consecutive trading sessions to close at $46.40 per share on Nov. 4.

On Nov. 5, Barron’s published an article stating 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 ending July 2011 of $2.61 per share, before non-cash charges and expenses. On this news, the stock fell an additional $7.31 per share, or nearly 16 percent, to close at $39.09 per share on Nov. 7.

On Dec. 12, 2011, Diamond Foods stock fell 20 percent after the announcement that its internal audit would not be completed until mid-February.

On Dec. 15, Diamond Foods disclosed that it is being investigated by the Securities and Exchange Commission (SEC), causing Hagens Berman to deepen its investigation. Diamond Foods has said it will fully cooperate with the SEC investigation.

On the news of the SEC investigation, stocks fell another 5 percent selling at $29.47 per share by the time the market closed. In September, the stock was trading near $90.

 

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