NEW YORK, July 16, 2002 (PRIMEZONE) -- The law firm of Wechsler Harwood Halebian & Feffer LLP ("Wechsler Harwood") filed a class action lawsuit on June 24, 2002 on behalf of all persons who acquired the common stock of Omnicom Group, Inc. ("Omnicom" or the "Company") (NYSE:OMC) between April 25, 2000 and June 11, 2002, inclusive (the "Class Period") in the United States District Court for the Southern District of New York.
The lawsuit asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC thereunder and seeks to recover damages. Any member of the class may move the Court to be named lead plaintiff. If you wish to serve as lead plaintiff, you must move the Court no later than August 12, 2002.
Specifically, the complaint alleges that Omnicom and certain of its officers and directors (together, "defendants") violated federal securities laws by issuing a series of material misrepresentations to the market during the Class Period, thereby artificially inflating the price of Omnicom securities. The complaint alleges that prior to and throughout the Class Period, defendants reported that Omnicom was continuing to experience growth in its revenues and earnings, despite the overall economic slowdown and the worst decline in advertising revenue that the industry had ever experienced.
As alleged in the complaint, Omnicom's growth was attributed, for the most part, to the numerous acquisitions made by the Company, which were accretive to the Company's earnings. However, on June 12, 2002, an article in The Wall Street Journal highlighted the Company's acquisition accounting and raised questions concerning the Company's creation of an off-balance sheet entity in which it transferred certain Internet investments. In particular, with respect to the Company's accounting for acquisitions, the article noted that: (i) Omnicom immediately included revenue and earnings from recent acquisitions in its reported financial results, in contrast to its competitors who excluded the results for the first year after the company was acquired, thereby creating a materially misleading impression of the Company's performance; (ii) the Company continued to owe hundreds of millions of dollars in additional payments for companies that it had previously acquired; and (iii) the Company faced a potential future liability whereby, under certain circumstances, it might be required to acquire companies in which it had invested. With respect to the off-balance sheet entity, The Wall Street Journal article described the Company's transfer of its Internet investments to Seneca, which had been jointly created with Pegasus Capital LLP in May 2001. According to the article, Seneca had been created as a vehicle for the Company to avoid reporting a loss on its investments in Internet companies that had become devalued.
In response to the revelations contained in The Wall Street Journal article, the price of Omnicom common stock dropped precipitously, falling almost 20% to close at $62.28, on volume of more than 31 million shares traded.
The complaint also alleges that on June 17, 2002, Omnicom acknowledged that it had received an informal request from the SEC relating to two directors who had reportedly resigned from Omnicom's board for reasons relating to Seneca.
If you are a member of the Class, you may move the court no later than August 12, 2002 to serve as a lead plaintiff for the Class.
Wechsler Harwood has taken a leading role in many important actions on behalf of defrauded shareholders. The Wechsler Harwood website (www.whhf.com) has more information about the firm. If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following:
Wechsler Harwood Halebian & Feffer LLP 488 Madison Avenue, 8th Floor New York, New York 10022 Toll Free Telephone: (877) 935-7400 Patricia Guiteau, Wechsler Harwood Shareholder Relations Department: pguiteau@whhf.com
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca