Three East Coast law firms have filed class action suits against stricken database supplier Informix claiming that some of the company's officers issued misleading financial information to bump up its stock price.
The three firms - Kaplan, Kilsheimer & Fox; Barrack, Rodos & Bacine; and Wolf Popper - each filed suit last week in the US District Court for the North District of California.
All three level the same basic charges against the company, following its announcement on 1 April that it would report "substantial" losses of up to $100 million at the end of this month. The main charges are manipulation of fiscal results and insider trading, the latter possibly involving sums of $22 million.
According to Barrack, Rodos & Bacine, Informix's senior management "manipulated" Informix financial results by recognising revenue from software licences at a time when the company was experiencing undisclosed problems with its operations and product development.
The law firm claims: "These problems forced Informix to change its distribution method, which resulted in sigificant cancellations and returns of licences in early 1997."
Informix annual 10-K statement to the US Securities and Exchange Commission admits that 25 per cent of the company's sold product was still in the reseller channel at the end of 1996 (see earlier story and analysis). This has created a bottleneck that contributed to the bad first quarter results due to be made public on 28 April.
The lawyers also level the allegation that Informix executives are guilty of insider trading by selling over 955,000 shares for a total of $22.2 million before the share price crashed on news of the profit warning.
The three new suits follow an earlier action filed by two individual investors on their own behalf last week (see earlier story).
But some investors subscribing to the Silicon Investor bulletin board appear to be keeping a stiff upper lip while waiting to hear the worst at the end of the month.
"Right now Phil White [Informix chief executive] has just awoken from a vivid dream involving billboards, shiny new headquarters and 30 per cent revenue growth to find himself in a fleabag hotel with a pounding hangover," wrote one investor. "We'll just have to give him a little time to crawl around on the carpet looking for his wallet, glasses and pants, while he tries to remember how he got there."
Tesla founder leaves OpenAI group - while Valve Software's Gabe Newell joins
'If someone were to venture into one of these relatively benign black holes, they could survive, but their past would be obliterated,' he claims
Captured by accident by an amateur astronomer in Argentina
Electric eel the inspiration for battery that uses hydrogel to store power