Wal-Mart Stores, Inc. (NYSE:WMT) Investor Files Class Action Lawsuit over Alleged Securities Laws Violations In Connection with Bribery Allegations At Its Wal-Mart de Mexico
May 07, 2012 (Shareholders Foundation) -- An investor in NYSE:WMT shares filed a lawsuit in the U.S. District Court for the Middle District of Tennessee against Wal-Mart Stores, Inc. over alleged Violations of Federal Securities Laws in connection with allegations of a massive bribery scheme at Wal-Mart’s largest foreign subsidiary, Wal-Mart de Mexico, and a six-year-long effort to cover up that scheme by certain top executives and directors of Wal-Mart.
According to the complaint the plaintiff alleges that Wal-Mart Stores, Inc and certain of its officers and directors violated the Securities Exchange Act of 1934 by issuing between December 8, 2011 and April 20, 2012, materially allegedly false and misleading statements regarding Walmart’s practices with respect to alleged unlawful or unethical conduct. Specifically, the plaintiff alleges that Wal-Mart Stores, Inc failed to disclose that its executives had been involved in an alleged bribery scheme at Walmart’s Mexican subsidiary, Wal-Mart de Mexico and as a result of defendants’ allegedly false statements, NYSE:WMT stock traded at artificially inflated prices December 8, 2011 and April 20, 2012, reaching a high of $62.48 per share on February 17, 2012.
On Sunday, April 22, 2012, the New York Times had published an extensive article concerning potential bribes made by Walmart de Mexico beginning as early as 2005. According to the article Walmart de Mexico may have spent more than $24 million in bribes. The article further alleged that Walmart de Mexico executives knew about the payments and actively took steps to conceal them. The article stated that “in a confidential report to his superiors, Wal-Mart’s lead investigator, a former F.B.I. special agent, summed up their initial findings this way: “There is reasonable suspicion to believe that Mexican and USA laws have been violated.”
Wal-Mart Stores issued on April 21, 2012 a response to the New York times article and said that Walmart met with the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) to self-disclose the ongoing investigation on this matter and that they informed investors in its quarterly report filed in December of the investigation.
The plaintiff says that illegal payments have and will continue to irreparably damage Wal-Mart's corporate image and goodwill and jeopardize its ability to do business in foreign countries. The plaintiff seeks to recover damages for the company's reputation as well as costs of investigating the claims.
On April 25, 2012, Mexico's federal officials said they would open an investigation into the bribery allegations.
On April 27, 2012, it was reported that a deli manager at a Walmart store has started an online petition calling for the resignations of Wal-Mart Stores’ chairman and chief executive officer.
Shares of Wal-Mart Stores, Inc. (NYSE:WMT) dropped to as low as $57.25 on April 25, 2012, wiping out billions in market cap.
NYSE:WMT shares closed on May 7, 2012 at $59.19 per share.