Omnicom Faces Class-Action Suit Over Accounting

Share this content:
A class-action lawsuit has been filed against advertising agency conglomerate Omnicom Group Inc., alleging accounting misrepresentations that inflated its share price between April 25 and June 11.


Omnicom owns ad agency networks like BBDO Worldwide, DDB Worldwide and TBWA Worldwide as well as direct shops like Rapp Collins Worldwide, Targetbase and Direct Partners.


Scott + Scott LLC, Colchester, CT, accused Omnicom chairman John D. Wren and other executives of reporting that the New York company was growing in revenue and earnings despite an overall sluggish economy.


Filed in the Southern District of New York in the U.S. District Court, the complaint alleges that Omnicom's growth was due to the number of acquisitions it made in the year.


The complaint relies heavily on a Wall Street Journal article that blew the whistle on Omnicom's acquisition accounting and the creation of Seneca, an off-balance sheet entity to which certain interactive agencies were transferred.


In that article, the Journal alleged Omnicom immediately included revenue and earnings from new acquisitions in its reported financial results. By contrast, Omnicom's competitors exclude the results for the first year after a company is acquired. Also, Omnicom owes hundreds of millions of dollars for firms it bought.


That article's publication caused a precipitous drop in Omnicom's share price.


Loading links....
close

Next Article in Agency

Sign up to our newsletters

Company of the Week

We recently were named B2B Magazine's Direct Marketing Agency of the Year, and with good reason: We make real, measureable, positive change happen for our clients. A full-service agency founded in 1974, Bader Rutter expertly helps you get the right message to the right audience at the right time through the right channels. As we engage our clients' audiences along their journey, direct marketing (email, direct mail, phone, SMS) and behavioral marketing (SEM, retargeting, contextual) channels deliver information relevant to the needs of each stage. We are experts at implementing and leveraging marketing technologies such as CRM and marketing automation in order to synchronize sales and marketing communications. Our team of architects and activators plan, execute, measure and adjust in real time to ensure the strategy is working as needed and change things if it's not.

Find out more here »

DMN's Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here