The Groupon matter was a Securities Fraud Class Action under the Securities Act of 1933 (Section 11) and the Securities Exchange Act of 1934 (Section 10(b)), in which the central economic issue was Loss Causation—whether, and to what extent, investors’ losses were caused by the disclosure of the facts underlying the plaintiffs’ allegations. Groupon, Inc. (“Groupon”), an online local-commerce marketplace, completed its initial public offering in November 2011 at $20.00 per share. In the months that followed—culminating in a set of disclosures on March 30, 2012 in which Groupon revised its fourth-quarter 2011 earnings and announced a material weakness in its internal controls—Groupon's stock price declined. The plaintiffs alleged that Groupon's registration statement and its 2011 earnings were materially false and misleading with respect to its accounting practices, internal controls, and ability to estimate customer refunds.
The plaintiffs’ expert submitted a report on loss causation and damages, opining on the methodology for computing damages and quantifying the losses attributable to the alleged misconduct. On behalf of Groupon, Professor Mark E. Zmijewski—the Charles T. Horngren Professor Emeritus of Accounting at The University of Chicago Booth School of Business—was retained to review that report and to provide his opinions regarding loss-causation analysis and market reaction / event study analysis.