Several recently filed lawsuits from stockholders have been lodged against Diamond Foods Inc., claiming the firm misled investors and overstated their finances.
The lawsuits have put an acquisitions deal by Diamond Foods of the $1.5 billion Pringles brand in question.
The lawsuits filed in San Francisco Superior Court and the U.S. District Court in San Francisco accuse Diamond Foods of delaying payments to their walnut growers past the end of their fiscal year in an effort to bolster their finances. The lawsuits allege this practice misled investors to believe Diamond Foods had higher profits and lower expenses.
Diamond Foods has been in the process of purchasing Pringles from Procter and Gamble Co. Part of the acquisition could have P&G shareholders exchanging some shares for Diamond Foods stock.
The San Francisco based company has begun an internal audit to look into the accounting issues and has hired Gibson, Dunn & Crutcher LLP and KPMG LLP to assist in the investigation.
"While we understand that the investment community would like the company to be providing additional detail about the investigation, we support the Audit Committee in its process, which includes refraining from public comment regarding these matters until the investigation has been completed," Michael Mendes, president and chief executive officer said in a news statement.
Diamond Foods disclosed the lawsuits Nov. 28 in a regulatory filing with the U.S. Securities and Exchange Commission.
The lawsuits were filed against the company and some of its executive officers. One such officer was Turlock resident Joseph P. Silveira, who died Nov. 15 at age 64. Silveira’s death was ruled a suicide by the Stanislaus County Coroner’s Office.
Diamond Foods said Silveira had been excluded from the accounting investigation because of a conflict of interest and that his death was not related to the probe.
In a released statement the company said: “Joe served Diamond shareholders as a director with dignity and dedication for many years. Any suggestion that his passing was somehow related to the accounting investigation by people seeking to profit by spreading such unfounded rumors is demeaning to his legacy.”
Diamond Foods was once a nut grower cooperative. It became a publicly traded corporation in 2005. Its brands include Diamond Culinary Nuts, Emerald Premium Snacks, Kettle Brand Potato Chips and Pop Secret popcorn.
Diamond Foods is not affiliated with Blue Diamond Growers, which recently announced plans to open a facility in Turlock.
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