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.


Next Article in Agency

Sign up to our newsletters

Company of the Week

Since 1985, Melissa has helped thousands of companies clean, correct and complete contact data to better target and communicate with their customers. We offer a full spectrum of data quality solutions, including global address, phone, email, and name validation, identify verification - available for batch or real-time processes, in the Cloud or on-premise. Our service bureau provides dedupe, email/phone append and geographic/demographic append services for better targeting and insight. For direct mailers, Melissa offers easy-to-use address management/postal software, list hygiene services and 100s of specialty mailing lists - all with competitive pricing and excellent customer service.

Find out more here »

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

Relive the 2017 Marketing Hall of Femme

Click the image above