Stockholders v McDonald's Corporation
Shareholders Unhappy that McDonald's Failed to Tell Them of Closings and Losses
Several class actions have been filed against fast food giant McDonald's Corporation (NYSE:MCD) and certain of its officers and directors by stockholders who purchased the company's common stock between December 14, 2001, and January 22, 2003. The actions claim that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock.
The action alleges that the defendants misrepresented the state of McDonald's business and future prospects by failing to disclose that hundreds of its restaurants were underperforming and that it had incurred hundreds of millions of dollars in unrecorded asset impairment and other charges. The defendants' scheme began to unravel in September 2002 when the company reported that "comparable sales" (i.e., year-over-year sales comparisons for restaurants that had been open for more than thirteen months) had continued to decline, especially in U.S. and European markets, making it impossible for it to meet its 2002 earnings guidance.
On January 23, 2003, the defendants announced that McDonald's had incurred losses of more than $810 million related primarily to the closure of over 700 underperforming restaurants and the write-off of hundreds of millions of dollars of previously capitalized technology costs. Prior to the disclosure of these adverse facts, McDonald's completed fixed-rate debt offerings of at least $900 million at highly favorable interest rates. In addition, the individual defendants, as well as other McDonald's insiders, allegedly sold over 939,000 shares of McDonald's common shares, at or near market highs, generating proceeds of more than $26 million.
If you purchased securities issued by McDonald's during the applicable period, you may request appointment by the court as a lead plaintiff if you do so by June 4, 2004. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that your claim is typical of the claims of other class members, and that you will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiffs. Your ability to share in any recovery is not affected by the decision whether or not to serve as a lead plaintiff. You may retain any counsel of your choice to serve as you in this action, or you may choose to do nothing, and remain in the class as a silent member.
