The deal of the day coupon company, Groupon Inc, announced it had lost a bid to dismiss a lawsuit alleging that the company misled investors about its financial performance. This allegedly illegal act was done before the company's IPO back in November 2011.
In April 2012, US District Judge Charles Norgle of Chicago had ordered Groupon to face a class-action lawsuit initially filed against the coupon company. The case stems from investor allegations that the company committed securities fraud. The allegations further state that Groupon had utilized impermissible refund accounting in order to boost its revenues contained in a prospectus issued for the IPO and in later US Securities and Exchange Commission documentation.
According to the ruling of Judge Norgle issued yesterday, "The court funds these allegations present plausible violations (of federal securities law)."
For its part, the company said there was a 'material weakness' in its fiscal controls back in March 30, 2012. It had reported quarterly sales as a publicly traded firm were lower compared to previous ones done due to the higher rate of refunds made to merchants. This caused revenues to be reduced in the quarter ending Dec.31, 2011 from the initially reported USD492.2 million to USD477.9 million.
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