U.S. judge dismisses case against Wal Mart over Mexico bribery

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Wal-Mart Stores Inc (WMT. N) on Monday won the dismissal of a U.S. lawsuit accusing the world's largest retailer of defrauding shareholders in its Wal-Mart de Mexico unit by concealing its suspected bribery of public officials in Mexico. U.S. District Judge Katherine Polk Failla in Manhattan said holders of Wal-Mex's (WALMEX. MX) American depository shares (ADRs) cannot pursue claims that Wal-Mex's former Chairman Ernesto Vega and Chief Executive Scot Rank knew or were reckless in not knowing about the bribery allegations. She also rejected shareholder claims that Wal-Mex and Wal-Mart were liable for Vega's and Rank's activity, and that Wal-Mex misled shareholders by saying it operated legally and ethically during the alleged bribery scheme. Lawyers for lead plaintiff Michael Fogel did not immediately respond to requests for comment. The lawsuit is one of several targeting Wal-Mart after The New York Times in April 2012 reported that the Bentonville, Arkansas-based retailer bribed Mexican officials for years to speed up store openings.

Wal-Mart's market value fell about $17 billion over three days after that report was issued. The Times' reporter later won a Pulitzer Prize for the report. Last September, a federal judge in Fayetteville, Arkansas said holders of Wal-Mart's U.S.-listed shares, represented by a different law firm, may pursue their claims in a class action, potentially boosting their recovery. A federal appeals court later rejected Wal-Mart's appeal of that ruling.

In the ADR case, Failla rejected as speculative a claim that Vega, who also chaired the Wal-Mex board's audit committee, and Rank were put on notice of the alleged bribery because a senior Wal-Mex audit executive "reported" to them. Failla said it was at least equally likely that Vega in particular might not have known because his relationship with the audit executive "was attenuated, or because an employee is likely to hide his wrongdoing from his supervisor."

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