New Notice of Infringement
Groupon and its founder, Mike Dillard, have agreed to settle their securities fraud case with the Securities and Exchange Commission for an undisclosed amount. This means that the company will pay shareholders over $6.5 million without admitting or denying their guilt. The settlement was announced just one day before Groupon is scheduled to go on sale to the general public.
).
This means that there will not be any payments made to the victims of the fraud. Groupon intends to raise funds by issuing Restricted Period Securities which can be purchased at a pre-determined price on or before June 29th, 2021. The company has also decided not to institute any class action lawsuit against its investors as yet. This means that investors who are not members of the group will not be able to join and participate in the lawsuit. However, if the company does file such a lawsuit, then all Class Members will be entitled to receive monetary damages.
According to the terms of the settlement, the company is agreeing not to use technology which transfers the ownership of their assets from the buyer to the group. Therefore, the sale of groupons from the site will not commence until the new deadline in the securities class action lawsuit against groupon is implemented. In addition, according to this new deadline, only limited parties will be permitted to purchase the securities or shares which will include Class A Shares and B Share holders. Furthermore, on or before June 30th, the company will make an announcement clarifying all changes which will take place with respect to the operations of the business starting on or before the new deadline. Finally, on or before the new deadline, the company will provide notice to all interested third parties.
As previously stated, the company is not disputing the claims that it engaged in securities fraud. Accordingly, the company is disputing the class action lawsuit against it. Specifically, it is challenging the validity of the District of Columbia’s “time limit” rule, which holds that the statute of limitations for securities lawsuits is ten years from the date of the violation. The argument is that although this rule is intended to provide protection to the investors, it is also intended to limit the liability of the company, which would effectively bar it from ever engaging in such conduct again. Accordingly, the company is contesting the validity of the time limit as well as seeking a permanent stay of the District of Columbia’s rule. The stay order may be stayed pending the conclusion of the case if the plaintiffs do not prejudice their claim by notifying the court that they plan to pursue their claim.
On a side note, the Nasdaq has issued a notice describing the events that led up to the expiration of the Class Action Lawsuit against Groupon. Among the events cited are the receipt of an email from the then CEO and CFO informing investors that the company would be selling its products. Shortly thereafter, an internal review of the business was conducted and that reviewed found that the sale of the products would indeed be completed. In addition to this, in the fall of 2021, the then CFO sent an email to the company’s registered stock holders advising them that the sale of the products would be made, and in November of 2021, the company did in fact sell its products. While the company acknowledges that it did receive permission from its former Chief Executive Officer and CFO to conduct business as usual with respect to selling its products, it maintains that it did not receive proper notice of the termination of its license to transact business on the Nasdaq as required by the securities laws.
Accordingly, the company urges investors to refrain from making an investment in the Class A shares that it owns as a result of the events that led up to the expiration of its Class Action Lawsuit against groupon. Specifically, the company urges investors to withhold their investment in the Company until it can work out an appropriate way to remedy the damages that have been sustained as a result of this unfortunate circumstance. Additionally, the company encourages investors to notify the Nasdaq that they plan to file a new complaint in federal court against the Groupon deceptive and fraudulent business practices. The company further warns that it will take a significant amount of time to deal with this matter.