Intel not guilty of securities fraud
Court dismisses class action complaint
The US District Court of San Jose, California has thrown out a class-action lawsuit that alleged Intel executives of securities fraud.
The complaint, filed by the Hawaii Reinforcing Iron Workers Pension Trust Fund and others, claimed that the chip giant's senior staffers had knowingly mislead shareholders over the company's performance, specifically July 2000 revenue projections that forecast Q3 sales would higher than Q2's. The executives' alleged efforts to talk up the share price were successful, and encouraged the plaintiffs to invest in INTC stock.
Intel's stock subsequently fell more than 40 per cent, wiping millions of dollars off the value of the plaintiffs' investment. They claimed that if Intel executives hadn't mislead them, they wouldn't have been so badly hit when the share price plummeted.
Intel's stock reached record levels on 28 August 2000, after Intel reiterated its bullish revenue projections, but fell to $46.50 on 22 September the day after the company admitted that its Q3 figures would be rather lower than anticipated. Seven days later, after delays to the Pentium 4 were announced, INTC shares were changing hands for under $42 a pop.
The plaintiffs' case was originally dismissed last October, but they were granted the right to amend their complaint. They duly re-filed, but the Court yesterday granted a motion from Intel to dismiss the case. The Court accepted Intel's argument that the plaintiffs had no evidence for their fraud claims.
In any case, Intel had appended its performance projections with the traditional 'safe harbour' statement, which warns that such forward-looking comments may be changed by unforeseen circumstances. ®