Executives at daily deals company Groupon are responsible for egregious corporate wrongdoing, a new suit alleges.
In a derivative complaint filed last Wednesday in Illinois, Groupon shareholder Theresa Monturano is suing the executives and board members for breach of fiduciary duty and abuse of control. Monturano, on behalf of the company itself, is seeking damages to be awarded to Groupon. The suit also seeks shareholder permission to nominate three candidates for election to the company’s board of directors.
The suit, first discovered by PaidContent, is in direct response to Groupon’s recent accounting restatement, which led to a bevy of bad press and sent its stock price plummeting. The complaint specifically names Groupon founder and CEO Andrew Mason, co-founders Eric Lefkofsky and Brad Keywell, and directors Peter Barris, Kevin Efrusy, Mellody Hobson, Ted Leonsis, and Howard Schultz (Starbucks CEO) as defendants.
“What became clear from the restatement in March 2012 was that the Company was not as profitable as had been initially represented,” the complaint states.
Groupon declined to comment on the lawsuit.
Monturano places all the blame on board members, who, the suit argues, “recklessly” failed to follow through on their duties and are now personally liable for Groupon’s subsequent losses.
“By reason of their positions as officers, directors, and/or fiduciaries of Groupon and because of their ability to control the business and corporate affairs of Groupon, Defendants owed Groupon and its shareholders fiduciary obligations of good faith, loyalty, and candor,” the suit states. “Defendants intentionally, recklessly, or negligently breached or disregarded their fiduciary duties to protect the rights and interests of Groupon.”
The derivative lawsuit is likely just one of many legal complaints to come. Last week, investor Fan Zhang filed a class action lawsuit against Groupon in a Chicago court. A securities lawyer VentureBeat talked to last week said we should expect a slew of lawsuits against Groupon from shareholders who felt the company misled them about financials.