Salesforce.com shareholders have filed class action suits against senior company executives including CEO Marc Benioff, alleging that the company misled investors to prop up its recent IPO price.
The suit was filed in US District Court for the Eastern District of North Carolina on behalf of investors who purchased shares during the company's stock launch last month.
The complaint, introduced by law firm Schiffrin & Barroway, alleges that Salesforce and two executives - Benioff, and chief financial officer Steve Cakebread - failed to disclose "adverse" pertinent information to investors.
"The company knew or recklessly disregarded the fact that its revenues and earnings per share were steadily declining," the lawsuit alleged. "The defendants concealed the aforementioned facts from the investing public, in order to boost the price of the IPO, which netted the company $126 million."
Two other law firms - Charles Piven and Lerach Coughlin Stoia & Robbins - have separately begun pursuing class-action cases against Salesforce.com and one or more of its officers and directors. Piven filed its suit on Tuesday and Lerach its case on Monday in the U.S. District Court for the Northern District of California. Both claim that the defendants made materially false or misleading statements about the Salesforce's financial prospects.
Salesforce.com’s IPO was an enormous success last month, but two weeks ago the company's share price plummeted 27 per cent after it forecasted revenue of $165 million and earnings of 3 cents a share for fiscal year 2005. Those figures fell short of analysts estimates of $175 million in revenue and earnings of 6 cents a share.