Retailer's legal worries mount

Retailer's legal worries mount
26 February 2003
AMSTERDAM — Two law firms representing US shareholders in Dutch retail giant Ahold have lodged a damages claim against the company, which has admitted misreporting its profits.

RTL television news said the firms are claiming the damages based on their allegations that Ahold withheld sensitive information in financial reports it issued between 15 May 2002 and 21 February 2003. They claim the withholding of that information kept the firm's shares artificially high.

On 24 February 2003, Ahold — which operates Albert Heijn and several other retail chains in the Netherlands and worldwide — issued a statement admitting that its US Foodservice unit had misreported its earnings by USD 500 million (EUR 465 million).

The Ahold CEO, Kees van der Hoeven, and the company's financial director Michiel Meurs stepped down.

News of the false earnings reports and possible fraud has led to a collapse of Ahold's share price, stripping away two thirds of the value of the massive company, which reported turnover of EUR 72 billion for 2002.

RTL news reported on Wednesday that a claim for an undisclosed amount had been lodged against Ahold's office in Virginia and New York.

A spokesman for law firms Cohen, Milstein, Hausfield & Toll and Wolf Haldenstein Adler Freeman & Herz said it was not clear at this stage how many shareholders would join in the legal action.

Meanwhile, Euronext Amsterdam stock exchange has announced that it is launching its own investigation to establish whether Ahold broke the rules in relation to the release of sensitive information that could affect the company's share price.

[Copyright Expatica News 2003]