Monday, July 9, 2012

Diamond Food Board Sued over Financial Problems and Botched Merger Plans

We previously reported on Diamond Food’s SEC investigation into certain crop payments the company made to walnut growers at the end of its 2010 fiscal year.  See Diamond Foods SEC Investigation. 

On Wednesday, shareholders filed a lawsuit against the board of Diamond Foods for costing it the chance to buy its rival Pringles from The Procter & Gamble Co.  In the midst of the accounting scandal in which crop payments allegedly were improperly reported to inflate the company’s 2010 earnings and shift costs into its 2011 fiscal year, Diamond’s stock price fell from last year's high of $96.13 to Wednesday's close of $17.49, a loss of about 80 percent.    

The lawsuit, being held in Delaware, is a derivative complaint, meaning the shareholders seek permission to step into the shoes of the company and hold directors and officers responsible for harm they caused.