|  | | 2008 News and Press Releases | | |
DISMISSAL NEWS:
Comverse Lawyer Off The Hook On Accounting Charge
Denise Oliveira
Securities Law 360. July 22, 2008
_________________________________________________________________________
EXCERPT: A federal judge has dismissed a claim against the former general counsel for Comverse Technology Inc. in a securities class action that accuses the company and several of its employees of options backdating and accounting manipulations. On Thursday, the U.S. District Court for the Eastern District of New York dismissed the plaintiffs' claim that William F. Sorin violated Sections 10(b) and 20(a) of the Securities Exchange Act by participating in accounting manipulations at Comverse. The ruling did not address the claim about Sorin's alleged participation in an options-backdating scheme. The class action was filed on April 19, 2006 – two days after the company announced it would need to restate its financial results for years 2001 to 2005 because of alleged backdating of stock options granted to senior executives. The lead plaintiffs, Menorah Insurance Co. Ltd. and Mivtachim Pension Funds Ltd., filed a motion for class certification last week. The lawsuit also names as defendants Jacob “Kobi” Alexander, former Comverse chairman and CEO, and David Kreinberg, former CFO and vice president of finance. The plaintiffs had accused Sorin of misuse of reserves, manipulation of backlogs, premature recognition of revenue, improper classification of certain expenses and improper treatment of tax deferral accounts. The court dismissed the claim that Sorin participated in a “scheme to inflate Comverse's share price through various improper accounting manipulations” because the plaintiffs had not met the heightened pleading requirements of the Private Securities Litigation Reform Act of 1995. Under the PSLRA, the plaintiff must “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind,” the court said. And the U.S. Supreme Court has defined the required state of mind for Section 10(b) claims as “a mental state embracing intent to deceive, manipulate, or defraud.” |
|
|
