Securities Law

Backdating Class Action Tossed

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A federal judge has dismissed a securities class action against Mercury Interactive, but legal troubles are not over for the company and some of its former executives.

Judge Jeremy Fogel of San Jose gave the plaintiffs leave to amend the suit against the company, now owned by Hewlett-Packard, the Recorder reports. He ruled Monday that the complaint seeking damages for stock options backdating failed to specifically state shareholder losses. Nor did it adequately allege that the defendants acted knowingly or with deliberate recklessness, he said.

The plaintiffs’ attorney, Joel Bernstein of New York-based Labaton Sucharow & Rudoff, told the legal newspaper the amended complaint will address the judge’s concerns and “will be much longer than the last.”

The company agreed in May to pay a $28 million fine without admitting backdating charges. The Securities and Exchange Commission has filed civil charges against several executives in connection with alleged backdating. Among them are former general counsel Susan Skaer. Her attorney says she did not knowingly violate accounting rules. (See this post for details.)

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