Peregrine Securities Fraud
Private Investor Lawsuit
Introduction
Lieff Cabraser represents Lawrence L. Garlick, the co-founder and former Chief Executive Officer of Remedy Corporation ("Remedy") and 24 other former senior executives and directors of Remedy Corporation in a private (non-class) securities fraud lawsuit against Stephen P. Gardner, the former Chief Executive Officer of Peregrine Systems, Inc. ("Peregrine"), other former executive officers of Peregrine and its accounting firm Arthur Andersen.
The lawsuit, filed in California state court, arises out of Peregrine's August 2001 acquisition of Remedy and sets forth alleged violations of California statutory and common law. Plaintiffs charge that they were induced to exchange their Remedy securities for Peregrine securities on the basis of false and misleading representations made by defendants to them.
The Allegations
Plaintiffs obtained shares in Peregrine as the result of Peregrine's acquisition of Remedy on August 27, 2001. The complaint alleges that defendants made false statements and material omissions concerning the financial condition and sales practices of Peregrine during the course of the merger negotiations and period prior to and after the approval of the merger by the shareholders of both companies. These allegations include:
a. Peregrine had improperly booked revenues from indirect channels that were written off in later quarters and, thus, reported revenues were artificially inflated and did not reflect the true financial condition of Peregrine;
b. Peregrine's operating results were materially overstated due to its failure to timely write down revenues recorded from indirect sales that were written off in a later quarter(s), and its failure to disclose those write-downs to shareholders;
c. Peregrine failed to accurately record revenues and/or write down impaired or adjusted asset values on a timely basis in accordance with Generally Accepted Accounting Practices; and
d. Peregrine failed to disclose that it had prematurely recognized a portion of $100 million in revenue from the sale of software to MSPs.
Plaintiffs charge that had they known the truth of Peregrine's financial condition and outlook, they would have understood the true value of Peregrine securities and would not have entered into the merger on such unfavorable terms, with Peregrine securities valued at the substantially inflated market prices, or would not have agreed to the merger at all.
Case Status
Following the filing of the action in California state court, defendants removed the case to federal court. On June 30, 2003, the U.S. District Court granted plaintiffs' motion and remanded the case to California state court.
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