Groupon sued by shareholder over financial revisions
Complaint claims the daily deals site misled investors about the state of its financial health.
A Groupon shareholder filed a lawsuit today against the daily deals site, claiming the company misled investors about its financial health.
The lawsuit, which seeks class-action status, was filed four days after the company revealed in a regulatory filing that it had discovered "material weakness" in internal controls over its financial statement and that its fourth-quarter results were worse than previously stated because of higher refunds to merchants. The revisions increased its net loss for the fourth quarter by $22.6 million and reduced revenue for the quarter by $14.3 million to $492.2 million.
"Groupon's internal controls were so poor and inadequate that Groupon's reported results were not reliable," shareholder Fan Zhang alleged, according to Bloomberg review of the complaint filed in federal court in Chicago. Zhang said he paid nearly $62,000 for 3,000 Groupon shares between February 9 to March 6, only to sell them in March for a loss of more than $9,000.
Groupon representatives did not immediately respond to a request for comment.
The lawsuit comes a day after reports that Groupon's revision of its first set of financial results as a public company had, although the commission has reportedly not yet elected to launch a formal investigation of the company.
In addition to CEO Andrew Mason and other key executives and board members, the lawsuit names IPO underwriters Goldman Sachs and Morgan Stanley as defendants.