According to the docket posted, the plaintiff in the action filed a Notice of Voluntary Dismissal on February 9, 2004. On April 7, 2004, the Court entered the Order signed by U.S. District Judge Saundra Brown Armstrong withdrawing the class action complaint.
The complaint charges SonicWALL and certain of its officers and directors with violations of the Securities Exchange Act of 1934. SonicWALL provides Internet security solutions designed for broadband access customers in the small to medium enterprise, branch office, telecommuter, and education markets. The Company’s Internet security appliance is marketed under the SonicWALL name.
Specifically, the complaint alleges that during the Class Period, defendants knowingly shipped unassembled electronic components even though they were aware that the components would not and could not meet the specifications, requirements and warranties of agreements entered into with SonicWALL’s clients. The complaint further alleges that defendants knowingly caused SonicWALL to enter into these agreements with its clients knowing that it would be unable to provide products that would meet the specifications, requirements and warranties of the agreements. Moreover, defendants caused SonicWALL to enter into these agreements only to improve the Company’s financial status for these quarters as part of a fraudulent plan to manipulate its financial earnings reports and artificially inflate its share price, while actually having no intention of delivering product conforming with the agreements. According to the complaint there were substantial deficiencies in the Company’s products, including, among other things, circuit boards that had not been programmed and that did not have connector ports that were necessary to perform the tests required under the warranties and agreements.
Further, the complaint alleges that as a result of defendants’ issuance of false and misleading financial statements during the Class Period, SonicWALL’s shares traded at artificially inflated levels, allowing defendants to sell $34 million worth of their own SonicWALL shares.