Allegations that Avon Products Inc. bribed its way into the Chinese market sparked a hugely expensive internal investigation, reams of bad press and a settlement to resolve U.S. criminal claims. But a judge sent a proposed securities class action over the scandal back to the drawing board on Monday, dealing a defeat to plaintiffs lawyers at Motley Rice.
In a 59-page ruling, U.S. District Judge Paul Gardephe in Manhattan dismissed without prejudice a class action alleging that Avon’s leadership lied to shareholders about its compliance with the Foreign Corrupt Practices Act. Many of Avon’s alleged misstatements weren’t materially misleading, Gardephe concluded, and the plaintiffs hadn’t shown that Avon’s leaders knew about or consciously disregarded compliance failures by the company.
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