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New Groupon lawsuit targets execs, seeks board seats for shareholders

The lawsuits are coming fast and furious against Groupon (s GRPN) after the daily deal site admitted to dodgy accounting tactics in a recent SEC filing.

The latest complaint is a so-called “derivative suit” in which shareholders seek to stand in Groupon’s shoes and enforce the company’s rights against CEO Andrew Mason and other executives.

This is different from an earlier suit in which shareholders are seeking fraud damages based on Groupon’s alleged violation of the Securities and Exchanges Act.

Shareholders are upset over Groupon’s admission in an SEC filing of “material weakness” in its controls. In practice, this meant that the company pulled an accounting fast one over its refund policies — this in turn may have led people to buy Groupon shares at artificially high prices.

The derivative suit not only accuses the executives of abuse of control and breach of duty. It also seeks to shake up ¬†Groupon’s corporate governance, in part by letting shareholders nominate at least three candidates for the Board.

The success of the case will depend on the plaintiffs’ ability to show that it’s “futile” to expect the company’s existing leadership to take action themselves.

The lawsuit says “futility” exists because many executives are longtime friends who will not bring a lawsuit against each other. It also says the executives won’t sue because that would forfeit their directors and officers insurance.

Groupon has gained a reputation as the enfant terrible of the IPO world by racking up a series of legal and accounting scandals in its short life. At least four suits have already been filed over the latest scandal.

Here’s a copy of the derivative suit:

Groupon Derivative Suit Copy