A class action filed against Diebold may have contributed to Wally O'Dell's departure as the company's CEO. This news release from the Connecticut law firm Scott+Scott provides further details. Excerpts are below.
COLCHESTER, Conn., Dec. 13 /PRNewswire/ -- Scott+Scott, LLC (http://www.scott-scott.com), at the direction of clients, has filed a securities fraud class action in the United States District Court for the Northern District of Ohio against Diebold Inc. ("Diebold" or the "Company") (NYSE: DBD - News) and individual defendants. Presently, the class is defined in the complaint drafted by Scott+Scott as those who purchased Diebold securities between October 22, 2003, and September 21, 2005, inclusive (the "Class Period").
The complaint alleges that defendants violated provisions of the United States securities laws causing artificial inflation of the Company's stock price. According to the complaint, during the Class Period, the Company lacked a credible state of internal controls and corporate compliance and remained unable to assure the quality and working order of its voting machine products. It is further alleged that the Company's false and misleading statements served to conceal the dimensions and scope of internal problems at the Company, impacting product quality, strategic planning, forecasting and guidance and culminating in false representations of astonishingly low and incredibly inaccurate restructuring charges for the 2005 fiscal year, which grossly understated the true costs and problems defendants faced to restructure the Company. The complaint also alleges over $2.7 million of insider trading proceeds obtained by individual defendants during the Class Period.
Finally, investors learned the truth about the adverse impact of the Company's alleged defective and deficient inventory-related controls and systems on Diebold's financial performance. As a result of defendants' shocking news and disclosures of September 21, 2005, the price of Diebold shares plunged 15.5% on unusually high volume, falling from $44.37 per share on September 20, 2005, to $37.47 per share on September 21, 2005, for a one- day drop of $6.90 per share on volume of 6.1 million shares -- nearly eight times the average daily trading volume.