The law firm is making the claim on behalf of everyone who bought stock in Omnicom between April 25 2000 and June 11 2002 over claims on revenue growth.
Shares in the world's largest advertising group fell 12.3% yesterday, closing down $7.66 at $54.62. Omnicom's share price was already battered by a story on Wednesday in the Wall Street Journal saying there were questions over the company's accounting practices. At the beginning of the week, Omnicom shares were trading at $72.69. As recently as May, the price was over $90.
Wolf Popper said in a statement that Omnicom "fraudulently and misleadingly reported growth in 'organic' revenue that included revenue generated by newly acquired companies and failed to disclose Omnicom's future obligations relating to its prior acquisitions".
The law firm went on to allege that: "Omnicom transferred its minority investments in various internet companies to a newly formed entity (Seneca), enabling it to avoid writing down the value of its investments in those companies, and that Omnicom failed to disclose its contingent obligations to make additional investments in certain partially acquired companies."
Omnicom is reported to "completely disagree" with Wolf Popper's statement, but a spokesperson said that it was hard to comment without having seen the lawsuit.
On Wednesday, following the story in the WSJ, Omnicom CEO John Wren issued a statement saying: "We disagree with today's Wall Street Journal article about the company... We fully support the company's strategy, and are confident in its operating results, accounting practices and financial disclosures."
Yesterday, Omnicom, which owns the TBWA\ and BBDO Worldwide advertising networks, said it was sacking Andersen as its accountant and taking on KPMG.
If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the .