Another law firm files class action lawsuit against GMCR

Law Offices of Howard G. Smith, representing investors of Green Mountain Coffee Roasters Inc, has filed a class action lawsuit in United States District Court on behalf of a class consisting of all persons or entities who purchased the securities of Green Mountain between July 28, 2010 and September 29, 2010, inclusive. The class action lawsuit was filed in the United States District Court for the District of Vermont. The firm had previously indicated it was investigating whether it would take such action.
The complaint charges Green Mountain and certain of the Company’s executive officers with violations of federal securities laws. Green Mountain operates in the specialty coffee industry in the United States and internationally. The Company sells whole bean and ground coffee selections, cocoa, teas and coffees in K-Cup portion packs, and also manufactures and markets gourmet single-cup brewing systems under the Keurig brand name. The Complaint alleges that throughout the Class Period defendants issued false and/or misleading statements and/or failed to disclose that: (1) Green Mountain was improperly recognizing revenue; (2) the Company was using an incorrect gross margin percentage to eliminate the inter-company markup for certain products at its Keurig business, which was decreasing cost of sales; (3) as a result, Green Mountain’s financial results were overstated; (4) the Company’s financial results were not prepared in accordance with Generally Accepted Accounting Principles (“GAAP”); (5) the Company lacked adequate internal and financial controls; (6) as a result of the above, Green Mountain’s financial statements were materially false and misleading at all relevant times; and (7), as a result of the foregoing, the defendants lacked a reasonable basis for their positive statements about the Company, its business, operations and prospects.
On September 28, 2010, Green Mountain disclosed that the US Securities and Exchange Commission was conducting an inquiry related to certain of the Company’s revenue recognition practices and that the Company had been using an incorrect gross margin percentage to eliminate the inter-company markup in its K-Cup inventory balance residing at its Keurig business unit, which had resulted in a lower margin applied to the Keurig ending inventory balance effectively overstating consolidated inventory and understating cost of sales. As a result of this news, in after-hours trading on September 28, 2010, Green Mountain’s stock price declined $5.09 per share, or 13.75%, on unusually heavy volume.
No class has yet been certified in the above action. Until a class is certified, shareholders are not represented by counsel unless they retain one. This case involves Green Mountain securities purchased between July 28, 2010 and September 29, 2010. Interested parties have until November 29, 2010, to move for lead plaintiff status.
Source: BENSALEM, Pa.--(BUSINESS WIRE)--10.12.2010 http://www.howardsmithlaw.com.