Novatel Bid To Toss Securities Suit Gets 2nd Look

Novatel Bid To Toss Securities Suit Gets 2nd Look - 6/8/2009

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2009 News and Press Releases

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News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

DISMISSAL NEWS:

Novatel Bid To Toss Securities Suit Gets 2nd Look
Jocelyn Allison

Securities Law 360. June 8, 2009
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EXCERPT: A federal judge has decided to reconsider a decision to deny Novatel Wireless Inc.'s motion to dismiss a putative securities class action, in part because of the recent U.S. Supreme Court decision in Ashcroft v. Iqbal regarding heightened pleading standards. Judge Marilyn L. Huff of the U.S. District Court for the Southern District of California on Friday vacated an April 1 ruling denying the company's motion to dismiss a case accusing its executives of inflating Novatel's stock value so they could unload their own stock for a profit. In her ruling granting reconsideration, the judge cited Ashcroft v. Iqbal, a 5-4 ruling issued May 18 holding that the heightened pleading standard set forth in Bell Atlantic Corp. v. Twombly applies to all federal civil complaints. An attorney for Novatel declined to comment Monday on the judge's decision to reconsider. An attorney for the lead plaintiff could not immediately be reached for comment. The suit claims top executives at Novatel “bailed out” of $23.8 million in company holdings before its stock price collapsed on news that Sprint Nextel Corp., the company's largest customer, would stop purchasing Novatel's 720 USB modem months before it had a replacement product in place. The plaintiffs allege that the company and executives named in the suit made false and misleading statements about Novatel's market share and financial results and failed to disclose material information about its contracts with Sprint. They also claim that the company failed to disclose that it was prematurely shipping products in order to meet or exceed Wall Street expectations, which the plaintiffs claim led to the company improperly recognizing revenue.

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