BOSTON, July 16, 2004 (PRIMEZONE) -- An investor sued Red Hat Inc. ("Red Hat" or the "Company") (Nasdaq:RHAT) today, claiming the company and two top officers misled the investing public about its finances.
Berman DeValerio Pease Tabacco Burt & Pucillo (www.bermanesq.com) filed the class action in the U.S. District Court for the Eastern District of North Carolina. The lawsuit seeks damages for violations of federal securities laws on behalf of all investors who bought Red Hat common stock from June 19, 2001, through and including July 13, 2004 (the "Class Period").
To receive a copy of the complaint, you may contact the court, call the firm at (800) 516-9926 or go to http://www.bermanesq.com/pdf/RedHat-Cplt.pdf.
The lawsuit claims that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder, including U.S. Securities and Exchange Commission ("SEC") Rule 10b-5.
The complaint names as defendants: Red Hat; Matthew Szulik, who was at all relevant times the Company's president, chief executive officer and chairman; and Kevin B. Thompson, who was at all relevant times the Company's chief financial officer.
The complaint alleges that during the Class Period Red Hat issued materially false and misleading financial information to the investing public.
Specifically, the lawsuit alleges that Red Hat improperly booked its subscription fee revenue. This improper accounting violated Generally Accepted Accounting Practices ("GAAP") and resulted in significantly overstated quarterly operating profits and net income throughout the Class Period, which in turn inflated Red Hat's stock price.
According to the complaint, Red Hat then used that artificially inflated stock as currency to complete two acquisitions during the Class Period, exchanging over $32 million in inflated Red Hat stock as consideration for those deals. Company insiders, including the officers named in the lawsuit, also took advantage of the inflated prices by selling more than 3.3 million shares of Red Hat stock and reaping almost $50 million in proceeds.
On June 13, 2004, Red Hat shocked the investing public by announcing that the Company was the subject of an informal investigation by the SEC and would need to restate its financial statements for each of the past three years. The Company also announced that it would restate its results for fiscal first-quarter ended May 31, 2004.
In response to these revelations, the price of Red Hat's common stock plummeted. The stock fell more than 23% on June 13, 2004 alone, falling to an intra-day low of $15.62 per share, down $4.62.
If you purchased Red Hat common stock from June 19, 2001, through and including July 13, 2004, you may wish to contact the following attorney at Berman DeValerio Pease Tabacco Burt & Pucillo to discuss your rights and interests.
Steven D. Morris, Esq. One Liberty Square Boston, MA 02109 (800) 516-9926 law@bermanesq.com
If you wish to apply to be lead plaintiff in this action, a motion on your behalf must be filed with the court no later than September 13, 2004. You may contact the attorneys at Berman DeValerio to discuss your rights regarding the appointment of lead plaintiff and your interest in the class action, or you may submit information online at http://www.bermanesq.com/Securities/Signup1.asp?caseid=516. Please note, you may also retain counsel of your choice and need not take any action at this time to be a class member.
Berman DeValerio Pease Tabacco Burt & Pucillo prosecutes class actions nationwide on behalf of institutions and individuals, chiefly victims of securities fraud, antitrust law violations, and consumer fraud. The firm consists of 31 attorneys in Boston, San Francisco and West Palm Beach, Florida.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca