Robin Geller Rudman & Dowd LLP was recently appointed as lead counsel against Wal-Mart Stores Inc. in the pending class action suit brought by the City of Pontiac General Employees’ Retirement System.
Case No. 5:12-cv-5162-SOH was filed in May and has been moved to the Western District of Arkansas, Fayetteville.
The suit claims Wal-Mart’s leaders were well aware of the protests going on in the Mexican town regarding the illegal construction of a store barely a mile from ancient pyramids. The plaintiffs claim Wal-Mart key executives tried to hide bribes made to government officials and instead gave false statements which inflated the share prices.
The suit cites a dramatic drop in share price after the whole story was made pubic in an April New York Times article. The retirement system sold shares at a loss following the news fallout.
However, the share price rebounded to record highs within three months of the allegations.
But regardless, the plaintiffs claim Wal-Mart executives violated a 1934 Securities Law by withholding relevant information, by misrepresenting and failing to disclose material facts about the illegal transactions.
According to The New York Times, Wal-Mart’s Mexican division arranged to bribe an official of the Mexican government for a new store opening in the Elda Pineda’s alfalfa field, barely a mile from the town’s ancient pyramids. Building a store so close to the town’s cultural structures was against the local law.
The town’s leaders had prepared a zoning map for the city and they wanted to limit growth near the pyramids as the region was already too congested. However, as the stores in the chosen location would attract lots of consumers, Wal-Mart allegedly offered $52,000 to the government officials to change the zoning map in favor of the company before it became public, according the suit.
The U.S. Department of Justice and the Securities and Exchange Commission opened investigations into Wal-Mart’s actions saying they were likely in violation of Foreign Corrupt Practices Act in connection with the bribery payments.
Wal-Mart is also facing bribery and lobbying charges in India. In this scenario, the retail giant has recently reworked its legal team and promoted Karen Roberts to the post of executive vice president and general counsel. Wal-Mart said that Karen Roberts will take up the new roles from February 2013.
The new legal division is very significant as Wal-Mart believes that Roberts will play a crucial role to steer the company out of the legal tussles. Roberts will replace Jay Jorgensen, who has been shifted to the newly-created position of global chief compliance officer.
Wal-Mart CEO Mike Duke, named as one of five executives named in the suit, has said publicly, the company will get to the bottom of these allegations and deal swiftly with anyone who is found responsible for illegal or unethical dealings.