When making a decision whether to voluntarily disclose Foreign Corrupt Practices Act issues, corporate leaders need to understand the full range of ripple effects that will likely occur upon disclosure. (See here for the article “FCPA Ripples”).
One should not just look at the supposed reduction in an FCPA settlement amount and narrowly conclude that the company benefited from the voluntary disclosure. Such a narrow view fails to take into account the many other ripple effects resulting from the disclosure.
These pages have long highlighted that one ripple effect of FCPA scrutiny and enforcement is FCPA-related shareholder litigation and this post discusses what happened to Landec Corporation after it disclosed an FCPA investigation on January 2, 2020.
As highlighted in this previous post, on January 2, 2020 Landec Corporation disclosed that it retained a law firm to conduct an internal investigation “relating to potential environmental and Foreign Corrupt Practices Act compliance matters associated with regulatory permitting at the Tanok facility in Mexico. [Previously, the company acquired Yucatan Foods which owned the Tanok guacamole manufacturing plant]. The Company subsequently disclosed to the SEC and DOJ the conduct under investigation, and these agencies have commenced an investigation.”
The following day, the company’s stock price closed down approximately 10% (by the way the stock recovered from this FCPA-induced dip in approximately two weeks). Set forth below is what happened next.
January 6th
Glancy Prongay & Murray LLP announced “an investigation on behalf of Landec Corporation (“Landec” or the “Company”) investors concerning the Company and its officers’ possible violations of federal securities laws.” (See here).
Bragar Eagel & Squire, P.C., a nationally recognized shareholder law firm, announced that it is “investigating potential claims against Landec Corporation on behalf of Landec Corporation stockholders. Our investigation concerns whether Landec has violated the federal securities laws and/or engaged in other unlawful business practices.” (See here).
January 7th
Bronstein, Gewirtz & Grossman, LLC announced that it is “investigating potential claims on behalf of purchasers of Landec Corporation (“Landec” or the Company”). “The investigation concerns whether Landec and certain of its officers and/or directors have violated federal securities laws.” (See here).
The Law Offices of Frank Cruz announced “an investigation on behalf of Landec Corporation (“Landec” or the “Company”) investors concerning the Company and its officers’ possible violations of federal securities laws.” (See here).
Pomerantz LLP announced that it is “investigating claims on behalf of investors of Landec Corporation (“Landec” or the “Company”) […] The investigation concerns whether Landec and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices.” (See here).
January 8th
The Schall Law Firm, a national shareholder rights litigation firm, announced “that it is investigating claims on behalf of investors of Landec Corporation (“Landec” or “the Company”) for violations of the securities laws. The investigation focuses on whether the Company issued false and/or misleading statements and/or failed to disclose information pertinent to investors.” (See here).
January 15th
Rosen Law Firm, a global investor rights law firm, announced that “it is investigating potential securities claims on behalf of shareholders of Landec Corporation resulting from allegations that Landec may have issued materially misleading business information to the investing public.” (See here).
January 16th
Scott+Scott Attorneys at Law LLP, an international securities and consumer rights litigation firm, announced that it “is investigating certain directors and officers of Landec Corporation (“Landec”) for breaching their fiduciary duties to Landec and its shareholders.” (See here).
January 24th
The Law Offices of Frank R. Cruz announced an “investigation on behalf of Landec Corporation investors concerning the Company and its officers’ possible violations of federal securities laws.” (See here).
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