Great Wolf sued for allegedly misrepresenting company in IPO

Posted | Contributed by Jeff

Scott + Scott, LLC, at the direction of clients, filed a securities fraud class action on Monday in the United States District Court for the Western District of Wisconsin against Great Wolf Resorts Inc. The class is defined in the complaint drafted by the Scott firm as those who purchased Great Wolf securities between December 14, 2004, and July 28, 2005, inclusive, but any purchaser of Great Wolf securities can contact the firm as class periods can change as information is revealed. Great Wolf owns, operates, and develops drive-to family resorts featuring indoor water parks and other family-oriented entertainment activities.

Read the press release from eMediaWire.

I've been notified several times over the years that I was being represented in a class action suit against one entity or another. I don't think any of the "plaintiffs" ever get much money from the settlement, it all ends up in the hands of the attorneys representing the wronged parties like me. What a wonderful justice system we have.

The IPO documentation indicated Great Wolf was using non-GAAP (Generally Accepted Accounting Principles) accounting methodologies, so investors should have known and recognized the risk. The suit agains Great Wolf may go nowhere.

However, investors would probably have an excellent case against any advisors who recommended Great Wolf but failed to warn potential buyers about the non-standard accounting methodologies.

All publicly traded entities should pay attention -- use GAAP for all financial statements or risk of lawsuits like this one.

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