Stockholders v Citadel Security Software Inc.
Citadel Security Stockholders Sue for $24M in Lost Stock Value
A class action has been filed against Citadel Security Software Inc. (NASDAQ: CDSS), a TX based provider of technology for security systems, and certain of its officers and directors by stockholders who purchased the company's common stock between February 12 2004 and December 16, 2004. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock.
The complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them:
• that customer demand in the commercial portion of the Company's business was slowing;
• that the much touted, sizable pipeline of potential contracts failed to materialize due to poor management execution;
• that as a consequence of the above the Company's growth was lagging; and
• that defendants statements about the Company were lacking in any reasonable basis when made.
On December 17, 2004, the Company announced that it expected its revenue to fall seriously short of previous reports. Additionally, the complaint alleges that during the Class Period, defendants sold a total of 754,500 shares for proceeds totaling more than $3 million. These announcements caused the Company's stock to fall nearly 42 percent.
