A federal court in California has preliminarily approved the settlement of shareholder claims that Diamond Foods, Inc. “deliberately understated the costs of walnuts and improperly accounted for payments made to walnut growers to increase apparent profits and maintain higher share prices” in anticipation of the anticipated purchase of Pringles with company stock. In re Diamond Foods, Inc. Securities Litig., No. 11-5386 (U.S. Dist. Ct., N.D. Cal., order entered September 26, 2013). Additional details about the litigation appear in issues 464 and 482 of this Update. Under the terms of the agreement, the defendants will pay to the class $11 million and distribute 4.45 million shares of Diamond common stock—valued at $85.1 million as of August 2013. According to the court, while the maximum aggregated damages totaled some $430 million, the settlement is reasonable in light of “Diamond’s weakened financial condition.” It apparently has just $7.2 million in cash and cash equivalents and carries $579 million in long-term obligations. The final approval hearing will be held January 9, 2014.
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