Settlement Nears For IPG Lawsuits

As part of a proposal to settle shareholder lawsuits stemming from Interpublic Group’s $181.3 million accounting imbalance in 2002, IPG would retain an ombudsman for five years to review any future allegations of financial irregularities, according to a legal notice received last week by shareholders.

The ombudsman, a company called Pinkerton Compliance Services, will record and investigate each complaint. Depending on the nature of the claim, it may also be probed by IPG’s legal department, an internal audit group, IPG’s board or its audit committee, said the notice, which details the terms of the out-of-court settlement.

The notice offers shareholders who owned stock between 1997 and 2002—the time frame of the imbalance—a chance to get a piece of what IPG will pay to settle the suits. The amount will be at least $77 million and possibly as much as $117 million, depending on IPG’s average share price in the 10 trading days before a final settlement hearing, the notice said. All but $20 million of the settlement will be paid in stock.

The imbalance triggered a flurry of suits and a Securities and Exchange Commission investigation that continues to this day. The suits were consolidated into two actions: a securities class-action suit accusing IPG and board members of hurting shareholders, and a derivative action filed by a shareholder alleging harm to the corporation. The final hearing is scheduled for Oct. 22.