Feeds

3Com faces insider trading lawsuit

Bosses talked up share price for personal gain, claims suit

  • alert
  • submit to reddit

Maximizing your infrastructure through virtualization

3Com has been hit by a class action which alleges the company and unnamed "officers and directors" violated the US Securities Exchanges Act of 1934 by using company money to buy shares in order to boost the stock's value and thus allow the same "insiders" to sell their own shares for an even greater return. The suit, filed in the US District Court for Northern California, claims $130.4 million was spend buying back 4.3 million 3Com shares during the company's first and second quarters of the 1999 financial year. It also claims that 3Com staff made false and misleading claims about the company's performance in order to talk up the share price. And indeed between 1 September 1998 and 32 December 1998, 3Com's share price more than doubled, rising from $23 1/8 to $51 1/8. From November 1998, says the suit, 3Com insiders began selling 4.2 million of their own shares at prices as high as $48.69 per share to net, according to the complaint, $189 million. During February 1999, 3Com's stock fell back to $30 9/16 when it emerged Intel was trimming 3Com's share of the network card market. The suit claims 3Com executives said the company's business plan was intact causing its share price to rally slightly. Unfortunately, at the end of Q2 99, 3Com admitted its sales of modems and network cards were well down and that it was unlikely to match previous forecasts by some margin. By 3 March, the company's share price hit a low of $22 3/4. The action was filed by Atlanta-based law firm Chitwood & Harley, which is now asking 3Com common-stock holders who purchased stock between 22 September 1998 and 2 March 1999 to support the suit. 3Com had yet to respond to the suit at the time of posting. ®

Top three mobile application threats

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
Microsoft: We're making ONE TRUE WINDOWS to rule us all
Enterprise, Windows still power firm's shaky money-maker
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.