OM Group, Inc. (NYSE:OMG)

In the OM Group shareholder derivative litigation, Robbins Arroyo LLP served as lead counsel to plaintiffs bringing claims against certain officers and directors of OM Group, Inc., a leading global solutions provider of metal-based specialty chemicals and related materials.  The claims were based upon allegations that OM Group’s largest individual shareholder, who served as OM Group’s chief executive officer and chairman of the board, borrowed substantial sums of money on margin from Merrill Lynch, collateralized those loans with his OM Group stock, and agreed that if the price of OM Group’s stock declined, Merrill Lynch could issue a margin call and force the CEO to sell some or all of his OM Group stock to repay the loans.  Thereafter, OM Group issued a press release announcing a massive $108.2 million cobalt inventory write-down and a major company restructuring, causing the price of OM Group’s stock to plummet.  The following day, OM Group’s CEO sold over 700,000 shares of company stock after he received the substantial margin call from Merrill Lynch.

Robbins Arroyo LLP’s prosecution of the action uncovered a litany of inventory-manipulation accounting schemes employed by management to conceal OM Group’s true operational performance and financial condition.

During the litigation, our attorneys opposed and defeated defendants’ motions to dismiss, reviewed thousands of documents produced during discovery, conducted expert discovery, and took over forty depositions of witnesses and defendants throughout the United States and Europe.  After years of contentious litigation, Robbins Arroyo LLP obtained on behalf of our client and the company a settlement that included a $29 million payment to the company, the termination of the company’s CEO, the addition of two shareholder-nominated directors, and the implementation of various other beneficial corporate governance procedures at the company.

In re OM Group, Inc. Derivative Litigation, No. 1:03CV0020 (N.D. Ohio Nov. 10, 2005).

 

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