Two further lawsuits are poised to land on Omnicom Group’s Madison Avenue doormat as America’s legal profession sniffs the heady scent of rich class action pickings.
Lawyers’ highly sensitive olfactory organs first started to twitch after the resignation from Omnicom’s board in May of independent director and former chairman of its audit committee, Robert J Callender [WAMN: 10-Jun-02] .
Following which a critical article in the Wall Street Journal charging the group had misled investors about its financial results by including earnings from recent acquisitions, set litigious snouts quivering allegro molto.
Two lawsuits in quick succession were filed last month by New York shareholder litigation specialists [WAMN:14-Jun -02]; and on Wednesday two other law firms – Kaplan Fox in New York and Philadelphia practice Berger & Montague – announced they were also filing class actions against Omnicom on behalf of investors.
The furore that followed the original WSJ article was fanned by further critical pieces in the same newspaper, precipitating Omnicom shares into freefall on the New York Stock exchange, plunging as June neared its end to a five-year low at $36.50 (€36.84; £23.82).
However, the decline was arrested after ceo John Wren assured investors the group had “no skeletons in its closet” and at close of the market on Wednesday, stock had recovered slightly to $41.91 – although shares still stand at less than half their value on March 4 this year when they peaked at $97.35.
In the light of three recent account wins for Omnicom units – the Illinois Lottery (estimated value $20m) for DDB Chicago; plus Long John Silver restaurants ($25m-$30m)and Bank of America (value unstated) for BBDO North America – industry observers expect shares to continue their upward momentum in post-holiday trading today (Friday).
Data sourced from: BrandRepublic (UK); additional content by WARC staff