According to the complaint filed June 30, 2010, the accounting Defendant failed to withdraw its unqualified audit opinions after learning that the Defendant’s prior year financial statements were materially false. From at least 2002 to 2007, these fraudulent practices included: (i) improper use of “bill-and-hold” accounting; (ii) improper recognition of revenue on a lease agreement subject to an undisclosed side buy-back agreement; (iii) manipulating reserves and accruals; (iv) improperly delaying and capitalizing expenses; and (v) improperly writing up the value of used inventory.
As a result of these practices, Diebold filed numerous annual, quarterly, and current reports with the SEC, issued dozens of press releases, and otherwise made public statements that contained material misstatements and omissions concerning the Company’s financial performance and financial condition. In addition, KPMG issued reports containing unqualified audit opinions that were false and misleading for annual audits conducted for 2003 through 2006. Diebold’s fraudulent accounting practices misstated the Company’s reported pretax earnings by at least $127 million, and skewed the revenue and earnings trends that analysts and investors used to value Diebold’s stock. To correct the most recent misstatements, on September 30, 2008, Diebold restated its financial statements for the years 2003 through 2006, and the first quarter of 2007 (“1Q07”), in its belatedly filed Form 10-K for 2007.
On October 1, 2010, Judge Christopher A. Boyko granted Plaintiff Building Trades United Pension Trust Fund’s Motion to Appoint Pension Trust Fund as lead plaintiff, and further approved the selection of Robbins Geller Rudman & Dowd LLP as lead counsel and Landskroner Grieco Madden LLC as liaison counsel.
On December 6, 2010, the lead plaintiff filed an Amended Class Action Complaint. The defendants responded by filing several motions to dismiss on February 4, 2011.
According to the Memorandum Opinion and Order signed by Judge Benita Y. Pearson on September 30, 2011, the Court denies Defendants KPMG, Diebold, Miller, Geswein, and Krakora's motions to dismiss (ECF Nos. 38, 39 , 41 , 43 and 42 ). All allegations outside of the five-year statute of repose are, nevertheless, dismissed. Plaintiffs are directed to file an amended complaint within 21 days of the filing of this order. That amended complaint shall not include allegations outside of the five-year period of repose.
The defendants filed two motions for reconsideration of the September 30th order. The plaintiffs have filed oppositions.
On October 18, 2011, the lead plaintiff filed a Second Amended Complaint for Violation of the Securities Exchange Act of 1934. The defendants responded by filing several motions to dismiss on November 18, 2011.
On February 14, 2012, the Court issued a Memorandum of Opinion and Order denying an individual Defendant's motion to stay discovery in the State shareholder derivative action as moot. The Court also granted the motions of certain Defendants to the extent they regard striking Plaintiff's allegations preceding June 30, 2005.
On August 31, 2012, the Court issued a Memorandum of Opinion and Order granting Defendants' motions for reconsideration. Upon review, the Court modified its previous order in part, and dismissed Count I, the Rule 10b-5(b) claim, against certain individual defendant. On the same date, the Court issued an additional Order granting Plaintiffs' Motion for Reconsideration. The Court modified its earlier order, in part, and denied Defendants' motions to strike. Finally, the Court also issued an Order dismissing the motions to dismiss filed by certain defendants as moot or duplicative.
On November 1, 2012, the Court issued a Memorandum of Opinion and Order granting the motion to dismiss of an individual defendant.
On November 8, 2013, the parties entered into a Stipulation of Settlement.