NEW YORK: New allegations by a former executive at Omnicom Group could add legal fuel to the fire in a four-year securities-fraud lawsuit which claims the world's largest advertising services conglomerate created Seneca Investments to avoid taking write-downs on its online assets.
Michael Tierney, who became ceo at Seneca in 2001, filed an amended complaint in federal court in Manhattan alleging that Omnicom controlled the business and no other party contributed any assets to it.
He originally filed the suit in December 2006, claiming the ad giant owed him stock options of around $1 million (€760k; £513k). Omnicom insists the options never vested but Tierney's amended complaint matches similar charges in the securities-fraud suit.
He maintains that Seneca was under control of Omnicom and its president/ceo John Wren, and that the conglomerate "often made major decisions regarding Seneca and its assets" without informing Tierney. He left the company in 2004.
For its part, Omnicom insists Seneca was a separate entity. Lawyer Peter Wald said: "We ... strongly dispute Mr Tierney's contention that Omnicom controlled Seneca. The evidence shows that Mr Tierney and his management team have been responsible for the successful day-to-day activities of Seneca since May 2001."
The securities fraud suits were filed against Omnicom in 2002 after the Wall Street Journal ran a story about Seneca and other accounting practices. In March 2005 two of the lawsuit's three allegations were dismissed. The remaining accusation involves Seneca and the case is pending in federal court in Manhattan.
Data sourced from Wall Street Journal Online; additional content by WARC staff