SAN FRANCISCO (CN) - Top managers and board members of computer networking company Infoblox sold $39.4 million of their shares at prices inflated through false and misleading statements, a shareholder claims in a federal derivative lawsuit.
Lead plaintiff Korey Burnam claims that the company used extreme discounting to temporarily increase revenue, while denying it was doing so.
In the class period, from Sept. 5, 2013 to Feb. 14, 2014, Infoblox faced aggressive competition and a downturn in its business with the federal government, the complaint states. During that time, Burnam claims, Infoblox issued false statements about earnings and said it did not engage in discounting.
Meanwhile, "six of the seven members of senior management and five of seven company board members collectively sold over $1 million shares of their personally held shares of company stock generating proceeds of more than $39.4 million," the complaint states.
In February this year, when the company announced that demand was weakening and its revenue was decreasing, the share price dropped by nearly 50 percent, from $33.14 to $17.19, "wiping out nearly $850 million of the company's market capitalization in one day," Burnam says.
In the following months, three class action lawsuits were filed against Infoblox, the complaint states.
Named as defendants are president and CEO Robert Thomas, CFO Remo Canessa, and directors Richard Belluzzo, Daniel Phelps, Frank Marshall, Michael Goguen, Fred Gerson and Laura Conigliaro.
Burnam seeks restitution and damages for gross mismanagement, waste of corporate assets, breach of fiduciary duty, and - against Thomas, Goguen, Gerson and Phelps - for inside trading.
He is represented by David Bower with Faruqi & Faruqi, of Los Angeles.
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