Wal-Mart Stores wins shareholder suit linked to bribery claims in Mexico

The ongoing federal investigation regarding alleged violations of the Federal Corrupt Practices Act continues for Wal-Mart Stores. But the retail giant won a small victory Monday (Feb. 27) when a case brought by shareholders in New York was dismissed in federal court by U.S. District Judge Katherine Polk Failla.

Shareholders have filed various suits against Bentonville-based Wal-Mart in federal court claiming the retail giant concealed the allegations of bribery in its Mexican business unit. The basis of the shareholder claims are that when the allegations became public knowledge, they suffered lost share value. Shareholders often refer to the near $17 billion lost in Wal-Mart’s market-cap in April 2012 when the investigation was published in the New York Times.

New York plaintiff Mike Fogel was suing on behalf of shareholders of Wal-Mex between December 2011 and April 2012. The plaintiff claimed Wal-Mart and Wal-Mex made material representations to shareholders in federal filings from 2004 through 2011.

Failla noted in her decision that plaintiffs did not sufficiently make their case against Wal-Mart executives nor Walmex executives named in the suit. Failla notes in the filing the statute of limitations prohibits claims prior to April 5, 2008. She also sided with defendants on the other claims raised, such as actionable omissions made as well as misrepresentations. Overall she said the plaintiffs had three chances to establish a claim based on these facts and doesn’t get a fourth try. She denied plaintiffs’ motion to amend their claim and dismissed the entire case, terminating all pending motions.

Wal-Mart has said repeatedly it self-reported the alleged misconduct to the proper authorities well ahead of the April 2012 New York Times story.

Mike Koehler, law professor at Southern Illinois University, tracks the FCPA investigation of dozens of other companies at any given time. Koehler recently told Talk Business & Politics that two-thirds of the public companies he tracks provide less transparency than Wal-Mart regarding FCPA matters.

“We appreciate the Court’s careful consideration of the issues and dismissing these claims,” Wal-Mart corporate spokesman Randy Hargrove noted in an email to Talk Business & Politics.

While Wal-Mart won this victory in New York, that was not the case in Fayetteville where in September U.S. District Judge Kathy Hickey from the Western District of Arkansas granted class-action status for investor plaintiff City of Pontiac General Employees Retirement System stating the case could move forward. Hickey’s ruling claimed the retail giant violated the Securities and Exchange Act of 1934 by not disclosing the investigation in required federal filings in a timely fashion. Wal-Mart had previously argued for dismissal of the pension fund’s claims citing there was no related financial loss for the investor.

Wal-Mart previously voiced disappointment with the Hickey ruling, but said Monday it would be improper to discuss any impact the New York ruling might have on other pending cases.