Red Hat hit with class action (No.2)
These investments could go up as well as down - if they go down we'll sue
Another law firm is launching a class action suit against Red Hat - blaming the firm for its falling share price.
Red Hat said two weeks ago it was changing the way it accounts for software licences - in future these will be measured on a daily basis rather than monthly. The firm is also going back over accounts for the last three years. Despite this having no impact on overall revenues Red Hat shares were hammered - falling more than 20 per cent in a day.
Schiffrin & Barroway filed a class action suit in the eastern district of Northern Carolina on behalf of all purchasers of Red Hat shares between 18 December 2003 and 12 July 2004. The complaint names CEO Mathew Szulik and CFO Kevin Thompson and alleges they, and the company "failed to disclose and misrepresented the following adverse facts which were known to the defendants or recklessly disregarded by them". It alleges that the incorrect accounting of software subscriptions meant the company "manipulated its quarterly earnings", lacked internal controls and "financial results were materially and artificially inflated at all times.".
Lawyers Goodkind Labaton Rudoff & Sucharow were even quicker off the mark - they filed a class action lawsuit on 14 July for anyone who acquired Red Hat shares between 19 June 2001 and 13 July 2004. ®