Interpublic Group must face a class-action lawsuit alleging it misled investors after a judge rejected attempts to have the case dismissed.
The suit was filed by the embattled agency giant’s own shareholders plus former investors in True North Communications, which Interpublic acquired in 2001.
Angry at the accounting irregularities uncovered at the group’s McCann-Erickson unit, the plaintiffs are accusing IPG of releasing misleading financial statements [WAMN: 19-Dec-02]. These bookkeeping queries first came to light last summer, prompting a series of restatements which culminated in March’s admission that some $347 million (€296m; £211m) had been incorrectly reported.
As well as IPG, the suit names as defendants former chief executives John Dooner and Phil Geier, chief financial officer Sean Orr and his predecessor Eugene Beard.
Interpublic must now defend itself against these charges in court after its bid to have the case thrown out was dismissed by a New York federal judge, who commented: “The decision to grow by acquisition motivated [Interpublic] to inflate its reported earnings … in order to have a higher stock price than it would otherwise have had.”
Data sourced from: BrandRepublic (UK); additional content by WARC staff