A class action lawsuit has been filed against Rational Software, alleging insider trading by some of its executives.
Filed in the US District Court for the Northern District of California, the complaint charges Rational and certain of its officers and directors, and Cowen & Co, a brokerage firm, with insider trading through the trading day of 8 October 1997.
The class action alleges that Rational provided material inside information that "revenue growth and EPS for FY99 will be lower than current analyst published estimates" to Cowen & Co. Based on that information, Cowen sold or helped in the sale of Rational shares, the allegations continue. It was not until 4.39pm, claims the class action, that the same information was made public. When the news was made public, Rational's stock price fell by 30 per cent from $14-13/16 to $9-15/16.
Last week Rational confirmed that its results for the second quarter of 1997 showed a loss of net loss of 74 cents per share.
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