Groupon sued by investor for accounting, IPO

? Frank Polich / Reuters / REUTERS

Groupon's corporate office and headquarters in Chicago.

By msnbc.com staff

Groupon, the world?s largest online coupon website, is being sued by a shareholder for misleading investors about its financial results and concealing weak internal controls.

According to a complaint filed in federal court in Groupon?s hometown of Chicago, the company overstated revenue, issued materially false and misleading financial results, and concealed how its business was not growing as fast and was not nearly as resistant to competition as it had suggested.

Late last week Groupon unexpectedly revised its first financial results as a public company, reported in Februray, reporting a bigger net loss and said it had a ?material weakness? in its internal controls, having failed to set aside enough money for customer refunds.

Groupon wowed investors when it went public in November -- the latest in a list of new social media companies to hit the public markets. Its IPO valued the company at the time at well over $10 billion.

Groupon?s share price rose above its IPO price of $20 per share to as high as $30 per share on the company?s first day of trading. But it has since seen its share price sink 42 percent from those opening levels. It is currently trading near $15

The leader in the fast-growing Internet daily-deals space populated by rivals such as Amazon.com and LivingSocial had been criticized by some analysts and investors for aggressive accounting in the run-up to the IPO.

The complaint said Groupon did not reveal its "poor and inadequate" internal controls, and concealed in its registration statement and prospectus for its November 2011 initial public offering that it did not comply with various countries' laws.

Julie Mossler, a Groupon spokeswoman, declined to comment. The company has said it does not discuss pending litigation. Several other law firms have said they may file similar lawsuits.

The lawsuit seeks class-action status on behalf of shareholders who acquired Groupon shares between Nov. 4, 2011 and March 30, 2012.

Among the other defendants are Groupon Chief Executive Andrew Mason and several banks that helped take the company public, including lead IPO underwriters Credit Suisse, Goldman Sachs and Morgan Stanley.

The plaintiff is Fan Zhang, who said he paid nearly $61,800 for 3,000 Groupon shares in February, and sold them in March at a loss of more than $9,000.

On March 29, Groupon agreed to an $8.5 million settlement of nationwide litigation alleging the expiration dates on its coupons are illegal.

The shareholder case is Zhang v. Groupon Inc, U.S. District Court, Northern District of Illinois, No. 12-02450.

Reuters contributed to this report.

Related:

The deal may be off for Groupon, analysts warn

jonbenet ramsey jason campbell doobie brothers jennie garth peter facinelli chicago bears marques colston buffalo bills