According to an article dated November 26, 2007, shareholders of Swiss employment firm Adecco SA have lost a bid to overturn a federal judge's summary dismissal of their amended securities fraud suit, with an appeals court ruling the plaintiffs had failed to prove their case. In a decision issued Tuesday, the appeals court affirmed a California district judge's decision to toss the lawsuit with prejudice for its inadequate showing of claims that the company and its executives scammed investors by understating its bad debts.
On April 25, 2006, the plaintiffs filed a notice of appeal from the March 29, 2006 Judgment dismissing the action. The appeal is currently pending in the Ninth Circuit Court of Appeals.
According to a press release dated April 4, 2006, the Adecco Group, the worldwide leader in Human Resource services, is pleased to announce that the amended class action complaint filed against Adecco S.A. and certain of its current and former directors and officers has been dismissed. The United States District Court for the Southern District of California dismissed the complaint with prejudice and without further leave to amend and directed that judgment be entered in favour of the defendant. Unless the plaintiffs file an appeal within 30 days the judgment will become final.
In a press release dated November 16, 2005, after the pending consolidated class action complaint filed against the company and certain of its directors and officers in the United States District Court for the Southern District of California was dismissed without prejudice, the plaintiffs filed an amended complaint.
In a press release dated May 19, 2005, Adecco announced that the pending consolidated class action complaint filed against the company and certain of its directors and officers in the United States District Court for the Southern District of California has been dismissed. The Court's order dismisses the complaint without prejudice and grants plaintiffs leave to replead within 45 days.
In a press release dated March 8, 2005, the staff of the US Securities and Exchange Commission has notified Adecco SA that its investigation of the Group has been terminated and that no enforcement action has been recommended.
On May 26, 2004, the Court entered the Stipulation and Order transferring the New York actions to the U.S. District Court for the Southern District of California.
The original Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market, thereby artificially inflating the price of Adecco common stock. Specifically, the complaint alleges that, throughout the Class Period, defendants issued numerous positive statements and filed reports with the SEC which described the Company's increasing financial performance. As alleged in the complaint, these statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (1) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; (2) more specifically, that the Company's North American operations had material weaknesses in its internal controls; and (3) as a result, the values of the Company's net income and financial results were materially overstated at all relevant times.
The complaint alleges that during the Class Period defendants caused Adecco to report in its public filings, press releases and other public statements favorable financial results by, among other things, artificially inflating the Company's revenue and earnings by improper accounting practices. Specifically, the complaint alleges that on January 12, 2004, Adecco shocked the market when it announced that it did not expect the audit of its consolidated financial statements for the 2003 fiscal year, ended on December 28, 2003, to be completed by Adecco's auditors, by the previously announced release date of February 4, 2004. The Company identified the following reasons for the delay: i) the identification of material weaknesses in internal controls in the Company's North American operations of Adecco Staffing; ii) the resolution of possible accounting, control and compliance issues in the Company's operations in certain countries; and iii) the completion of the Company's efforts to address these matters and determine their effect on the Company's consolidated financial statements. In response to this announcement, the prices of all Adecco securities dropped sharply, with Adecco shares traded on the New York Stock Exchange tumbling more than 30%, or $5.23 per share, to close at $11.70 per share on extremely heavy volume.