San Diego, Nov. 4, 2011 (Shareholders Foundation) -- An investigation on behalf of investors in shares of C Diamond Foods, Inc. (NASDAQ:DMND) over possible Violations of Federal Securities Laws was announced.

The investigation by a law firm focuses on possible claims on behalf of purchasers of the securities of Diamond Foods (NASDAQ:DMND) concerning whether the company, certain of its officers and directors, or others have possibly violated federal securities laws. Specifically, the investigation concerns whether certain statements regarding C Diamond Foods business, its prospects and its operations were potentially materially false and misleading at the time they were made.

On August 5, Diamond Foods, Inc agreed to merge with Proctor & Gambles (NYSE: PG) Pringles division. The $2.35 billion transaction will reportedly include $1.5 billion of Diamond Foods stock and the assumption of $850 million of Pringles debt.
On November 1, 2011 after the market closed, Diamond Foods issued a press release revising the expected closing date of the previously announced acquisition of the Pringles snack business business from The Procter & Gamble Company following the receipt by the Chairman of the Audit Committee of Diamonds Board of Directors of an external communication regarding Diamonds accounting for certain crop payments to walnut growers. Additionally, Diamond Foods disclosed that Diamond Foods Audit Committee decided to perform an investigation of the accounting matter.
The payments were allegedly timed to make 2011 fiscal year costs appear lower than they actually were. One source estimates that the payments were worth as much as $50 million and would have reduced Diamond's operating income by more than 50%, if they had been included in the fiscal year ended July 31, 2011.
Shares of Diamond Foods, Inc. (Public, NASDAQ:DMND) fell from $64.12 per share on Nov. 1, 2011 to $46.40 on Nov. 4, 2011. In fact, NASDAQ: DMND stocks fell from over $92 per share in September 2011 or by almost 50%.