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A federal class action lawsuit filed Thursday accuses Salesforce.com (NYSE: CRM), its CEO and its chief financial officer of withholding critical, detrimental financial information from potential investors in order to boost the share price of the company's IPO.
The lawsuit was filed in the U.S. District Court in San Francisco by the law firm Bernstein Liebhard & Lifshgitz on behalf of anyone who acquired shares of Salesforce.com stock between June 21 and July 21 of this year.
The complaint charges that Salesforce.com Chairman and CEO Marc R. Benioff and Chief Financial Officer Steve Cakebread failed to disclose and misrepresented the full state of the company's finances.
Allegations in Complaint
The complaint alleges that the following adverse facts were known to the defendants or were recklessly disregarded by them:
According to the law firm, Salesforce.com on July 21 warned that profit and revenue for the full year will be lower than expected. Upon that disclosure, the stock price promptly plunged. Shares of Salesforce.com fell $4.36, or 27.15 percent, on July 21, to close at $11.70 per share.
Salesforce.com did not respond to a query for comment about the lawsuit and the allegations.
Lead Plaintiff
The class action seeks to recover damages under the Securities Exchange Act of 1934 on behalf of all those who otherwise acquired Salesforce.com securities during the class period.
Bernstein Liebhard & Lifshgitz is currently seeking anyone who might want to join the class action to serve as lead plaintiff. In order to do so, appropriate papers must be filed no later than September 24.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class.
Interested parties may retain Bernstein Liebhard & Lifshitz, or other counsel, to serve as counsel in this action. Bernstein Liebhard & Lifshitz has been retained as one law firm to represent the class.
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