SunOpta to settle class action lawsuits
The lawsuits were brought against the company in 2007 after it emerged that it had overvalued its berry stocks, causing hefty pre-tax write-downs. This led it to restate its interim financial results for the first three quarters of 2007. The firm said in January 2008 that it expected sales for the previous fiscal year to be slightly over $800m, which was higher than its original estimations, but that earnings would be no more than $0.12 to $0.14 per share as a result of $12 to $14m in pre-tax write-downs.
The lawsuits, filed in New York and Ontario, claimed that investors were thereby misled about SunOpta’s financial performance. The company still denies any illegal activity, despite establishing the settlement fund and the adoption of “certain corporate governance enhancements”.
SunOpta said in a statement: “The settlement agreement contains no admission of wrongdoing by SunOpta or any of the other named defendants and the Company and the other named defendants expressly deny any liability or wrongdoing in the agreement.”
The governance enhancements include amendments to the company's audit charters, and the adoption of a policy for IT conversion.
One of the class action suits, filed in February last year by Kaplan Fox & Kilsheimer of New York, said that "the company shocked investors when it reported its anticipated financial results for 2007, disclosing for the first time that it expected to incur material write-downs and provisions in the range of $12m to $14m”.
SunOpta maintained at the time that the actions were without merit and that it intended to “vigorously defend itself”.
SunOpta said that the settlement funds will be entirely covered by its insurer.
