Silicon Graphics is the latest computer company to be hit with a class action lawsuit, accusing it of making misleading statements to inflate its share price for insider dealing.
And it won?t be the last, warn industry analysts. The suit, filed in the Northern District Court of California, covers the period between 24 July and 6 October, just before the company fired its CEO Ed McCracken and announced drastic restructuring, plunging the share price from over $30 to less than $14. The unnamed defendants are alleged to have raked in $7.4 million by selling shares before the announcement was made.
Silicon Graphics said it will ?vigorously defend? the case.
Analysts say the frequency of such legal action against listed IT companies is likely to increase because their share price is vulnerable to rapidly fluctuating technological development. Investors who lose money inevitably seek redress. A similar suit was filed against network vendor Cabletron last month.
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