If you bought shares in Krispy Kreme from Aug. 21, 2003, through May 7, 2004, you could get in on this: After the blow of the low-carb diet trend to their wonderful doughnuts, the company now faces a lawsuit by shareholders who claim that ''the company ineptly accounted for how their bottom line would be affected by the popular low-carbohydrate diets; first by claiming that the trend would have no influence, and then by over-exaggerating the effect of the diet fad."
The shareholders are also complaining that the senior executives named as defendants in the suit disregarded signs that the firm had expanded too quickly, that its wholesale business undermined sales at its retail stores, and that it faced stiff competition from doughnut chain Dunkin' Donuts.
I confess that I'm puzzled by this. At what point do poor business management and overly optimistic predictions become bases for litigation? I understood that the corporate scandals of the last several years mostly centered on dubious behavior like setting up shell corporations and misleading accounting. But no one is accusing Krispy Kreme of these actions; instead, the guilt of the executives appears to be grounded in their having done a less-than-optimal job. This rates litigation?