San Diego, CA -- (SBWIRE) -- 02/13/2012 -- The Shareholders Foundation announces that an investor in NASDAQ:DMND shares filed a lawsuit against members of the board of directors of Diamond Foods over alleged breaches of fiduciary duties in connection with Diamond’s accounting for certain crop payments to walnut growers.
Investors who are current long term investors in shares of Diamond Foods, Inc. (NASDAQ: DMND) including those who purchased NASDAQ DMD shares in 2010, 2009, 2008 or earlier and currently hold – some – of their DMND shares, have certain options and should contact the Shareholders Foundation at mail(at)shareholdersfoundation.com or call +1(858) 779 - 1554.
According to the complaint the plaintiff alleges that the defendants made false and misleading statements, as well as failed to disclose material adverse facts about Diamond Foods’ business, operations and prospects.
On August 5, Diamond Foods, Inc agreed to merge with Proctor & Gamble’s (NYSE: PG) Pringles division. The $2.35 billion transaction will reportedly include $1.5 billion of Diamond Foods stock and the assumption of $850 million of Pringles debt.
Then on November 1, 2011 after the market closed, Diamond Foods issued a press release revising the expected closing date of the previously announced acquisition of the Pringles snack business from The Procter & Gamble Company “following the receipt by the Chairman of the Audit Committee of Diamond’s Board of Directors of an external communication regarding Diamond’s accounting for certain crop payments to walnut growers.” Additionally, Diamond Foods disclosed that Diamond Foods’ Audit Committee decided to perform an investigation of the accounting matter.
The payments were allegedly timed to make 2011 fiscal year costs appear lower than they actually were. One source estimates that the payments were worth as much as $50 million and would have reduced Diamond's operating income by more than 50%, if they had been included in the fiscal year ended July 31, 2011.
NASDAQ: DMND shares dropped almost 40% on February 9, 2012 after Diamond Foods announced on February 8, after the market closed, that its Audit Committee of its Board of Directors has substantially completed its investigation of Diamond Foods' accounting for certain crop payments to walnut growers.
Diamond Foods said that the Audit Committee has concluded that Diamond Foods' financial statements for the fiscal years 2010 and 2011 will need to be restated and that the Audit Committee has concluded that a "continuity" payment made to growers in August 2010 of approximately $20 million and a "momentum" payment made to growers in September 2011 of approximately $60 million were not accounted for in the correct periods, and the Audit Committee identified material weaknesses in the Company's internal control over financial reporting.
Diamond Foods said that its Board of Directors will appoint a new Chief Executive Officer and Chief Financial Officer since on February 7, 2012, its President and Chief Executive Officer of Diamond, and Executive Vice President, Chief Financial and Administrative Officer of Diamond, respectively were placed on administrative leave from their positions.
Those who are current long term investors in shares of Diamond Foods, Inc. (NASDAQ: DMND) including those who purchased NASDAQ DMD shares in 2010, 2009, 2008 or earlier and currently hold – some – of their DMND shares, have certain options and should contact the Shareholders Foundation.
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