By Kevin LaCroix
For those of you who like me have been watching in disbelief as the accounting scandal engulfing Olympus Corp. has slowly unfolded like a slow-motion train wreck, I am sure you have many questions, but one that occurs to me in particular to ask is - why haven't there been any lawsuits yet? After all, the company has lost over 70% of its market capitalization value (representing more than $6.4 billion) since the scandal first came to light in mid-October.
Not only that, but after weeks of denial, on November 8, 2011, the company admitted in a press release (here) that "it has been discovered that the Company had been engaging in deferring the posting of losses on investment securities, etc. since around the 1990s," and that the fees the company paid to advisors in connection with three business acquisitions "had been, by means such as going through multiple funds, used in part to resolve unresolved losses on investment securities, etc., by such deferral in the posting of these losses." The company also separately announces on November 8, 2011 (here) that its board had voted to dismiss a company officer whom the company said in a press release "was found to be involved in such deferral in posting of the losses." In addition, the company also announced that its Standing Corporate Auditor had resigned.
A few facts start to fill in the explanation of why there have been no lawsuits yet, despite all of these circumstances and revelations, and despite the magnitude of the drop in the company's market capitalization.
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Read other items of interest from the world of directors & officers liability, with occasional commentary, at the D&O Diary, a blog by Kevin LaCroix.
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