Ex-Peregrine Execs Prevail In Shareholder Appeal

Ex-Peregrine Execs Prevail In Shareholder Appeal - 3/23/2009

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Ex-Peregrine Execs Prevail In Shareholder Appeal
Christine Caulfield

Securities Law 360. March 23, 2009
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EXCERPT: Shareholders of Peregrine Systems Inc. have lost a fight to revive their securities class action against former executives of the software maker, with a California appeals court upholding a judge's order denying their bid for additional discovery time and granting summary judgment in the defendants' favor. The state's Court of Appeal for the Fourth Appellate District on Friday affirmed the lower court's order, saying the plaintiffs had produced no evidence that the three defendant directors knew of the accounting scandal that sent the Silicon Valley company into bankruptcy in 2002. The Peregrine investors filed their action against former company directors John Moores, Charles Noell III and Christopher Cole in the Superior Court of San Diego in February 2003, alleging the three defendants were aware of a scheme to improperly recognize more than $500 million in software sales revenue and create an illusion of growth. Cole moved for summary judgment in March 2006, and Moores and Noell followed suit in June 2007. All three argued that the plaintiffs' had no evidence that they participated in, or even knew about, any allegedly fraudulent accounting practices at the company, which was bought out by Hewlett-Packard Co. in 2005. The shareholders responded to the summary judgment motions in August 2007 with a request to stay the case, saying they needed more time to gather additional testimony from witnesses who had invoked their Fifth Amendment rights and had refused to cooperate in light of pending or potential criminal proceedings. San Diego Judge Jeffrey B. Barton denied the plaintiffs' request in September 2007 and granted the defendants' motion for summary judgment in December of that year, finding that the three executives had “met their burden of proof to show they had no actual knowledge of the financial fraud committed by the employees and officers of Peregrine.”

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