Casino’s Cnova reaches $28.5 mln settlement in U.S. over IPO

By Jonathan Stempel

NEW YORK, Sept 22 (Reuters) – Cnova NV, the e-commerce arm of French retailer Groupe Casino, agreed to pay $28.5 million to settle litigation in the United States claiming it defrauded investors in connection with its November 2014 initial public offering.

The all-cash, preliminary settlement was filed on Friday with the U.S. District Court in Manhattan, and it requires a judge’s approval.

It resolves claims that Cnova inflated its share price by overstating net sales and profit, failed to properly write down the value of damaged and returned items and concealed employee misconduct and accounting irregularities at a Brazilian unit.

Cnova denied wrongdoing and liability but settled to avoid the risks and costs of litigation, which sought class action status, court papers show.

The plaintiffs are led by Jaideep Khanna and Michael Schwabe, and their law firm Brower Piven plans to apply for legal fees of up to one-third of the settlement fund, court papers show.

Cnova had gone public at $7 per share, but its share price had fallen by about two-thirds by the time litigation began.

The Netherlands-based company in December 2015 announced an investigation into inventory mismanagement at Brazilian warehouses, and two months later told investors they could no longer rely on some of its financial statements.

Cnova was delisted from Nasdaq in March, after Casino tendered for nearly all its outstanding shares in the United States, regulatory filings show.

The case is In re Cnova NV Securities Litigation, U.S. District Court, Southern District of New York, No. 16-00444. (Reporting by Jonathan Stempel in New York; Editing by Cynthia Osterman)

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