Salesforce.com Initiated to the World of Shareholder Lawsuits
A month after the company's IPO, its shareholders allege that it misrepresented its business performance, knowing or "recklessly" disregarding that its revenues and earnings per share were steadily declining, then concealing that decline fromIt didnt take long for Salesforce.com to join the ranks of publicly traded technology companies hit with shareholder lawsuits. Barely a month after the hosted CRM application services company issued its initial public offering of common stock, the company this week was sued by its new shareholders for misrepresenting its business performance. Schiffrin & Barroway LLP became the third law firm to sign on to the suit late Thursday. Schiffrin & Barroway filed in the U.S. District Court for the Eastern District of North Carolina on behalf of those who purchased Salesforce.com stock between June 21 and July 21. It alleges that Salesforce.com chairman and CEO Marc Benioff and chief financial officer Steve Cakebread violated the Securities Exchange Act of 1934 by failing to disclose and misrepresenting adverse facts about the companys business performance, leading up to and after the June 21 IPO.
Specifically, the suit accuses the company of knowing or "recklessly" disregarding that its revenues and earnings per share were steadily declining, then concealing that decline from investors in order to boost the price of the IPO, which netted the company $126 million. It said Benioff and Cakebread "lacked a reasonable basis" for their positive statements about the companys growth and progress.