Four legal firms in the United States have now issued class action proceedings against the troubled Irish software company, CBT.
A spokesman for the company again refused to comment yesterday on the legal actions. However one company source said such actions were not at all uncommon in the United States "whenever anything moves" and had been expected by CBT when its share price went into freefall last week.
CBT stock closed at around $9.80 on the Nasdaq yesterday, having opened at $10 and fallen to $9.50.
Legal firms Gold Bennett & Cera, San Francisco, California; Schiffrin Caraig and Barroway, Bala Cynwyd, Pennsylvania; Reinhardt & Anderson, St Paul, Minnesota and Milbert Weiss, San Diego, California, have all announced they have commenced class actions against the firm.
The complaint charges that the group and certain of its officers and directors violated the US federal securities laws by making misrepresentations about CBT's business, earnings growth and financial statements and its ability to continue to achieve profitable growth. The period to which the complaint refers is from January 20th to September 30th.
The complaints allege that allegedly false and misleading statements were issued by the defendants to artificially inflate the CBT stock price from $44 (£28.9) and three eights on January 20th, 1998, to a class period high of $637/8 and in July, 1998, allowing CBT group's "top insiders" to sell 557,655 shares at as high as $62 5/8 per share, for $26.8 million, "before the true facts about CBT group's declining revenues, diminished profitability and false financial statements were revealed" and the stock price collapsed.
A number of the main figures associated with CBT sold substantial amounts of stock during the period covered by the claims. Last week Mr Bill McCabe, who himself sold millions of dollars worth of stock during the period, returned to the helm of the company. Mr James Buckley, chairman and chief executive, and Mr Richard Okumoto, chief financial officer, stepped down and the company is now being run by a management committee headed by Mr McCabe.
"Recent events at CBT Group have created a crisis in confidence in the company," Mr McCabe said at the time. The collapse in the company's share price began on Monday last, when its value fell to almost half of what it had been in July.
