Robin Geller Rudman & Dowd LLP has been appointed as lead counsel against Wal-mart Stores Inc. (WMT) in the securities class action captioned City of Pontiac General Employees’ Retirement System versus Wal-Mart Stores, Inc., Case No. 5:12-cv-5162-SOH, pending in the Western District of Arkansas.
Although Wal-Mart’s leaders were well aware of the protests going on in the town regarding the illegal construction in Mexico, it tried to hide the fact and did not disclose it to the Mexican authorities, and instead gave false statements which inflated the prices. The share prices dropped dramatically after the whole story became public and The New York Times published the article.
Wal-Mart is accused with a bribery charge filed by the City of Pontiac General Employees’ Retirement System. According to The New York Times, Wal-Mart’s Mexican division arranged to bribe an official of the Mexican government for a new store opening in the Elda Pineda’s alfalfa field, barely a mile from the town’s ancient pyramids. Building a store so close to the town’s cultural structures was against the local law.
Further, the town’s leaders had prepared a zoning map for the city and they wanted to limit growth near the pyramids as the region was already too congested. However, as the stores in the chosen location would attract lots of consumers, Wal-Mart allegedly offered $52,000 to the government officials to change the zoning map in favor of the company before it became public.
The U.S. Department of Justice and the Securities and Exchange Commission alleged that Wal-Mart’s actions were against Foreign Corrupt Practices Act in connection with the bribery payments.
Wal-Mart is also facing bribery and lobbying charges in India. In this scenario, the retail giant has reworked its legal team and has promoted Karen Roberts to the post of executive vice president and general counsel. Wal-Mart said that Karen Roberts will take up the new roles from February 2013.
The new legal division is very significant as Wal-Mart believes that Roberts will play a crucial role to steer the company out of the legal tussles. Roberts will replace Jay Jorgensen, who has been shifted to the newly-created position of global chief compliance officer.
However, Wal-Mart competes against Target Corporation (TGT). Currently we have a Neutral recommendation on the stock. Wal-Mart carries a Zacks #3 Rank (short-term Hold rating).
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