Stockholders v Intelligroup, Inc.
Intelligroup Stock Plummets on News of Misrepresentations- Shareholders Take Action
A class action has been filed against Global technology solutions provider Intelligroup, Inc. (Nasdaq: ITIGE) and certain of its officers and directors by stockholders who purchased the company's common stock between May 1, 2001 and September 24, 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.
Intelligroup describes itself as a "leading global provider of strategic IT outsourcing services". Intelligroup develops, implements and supports information technology solutions for global corporations and public sector organizations. The complaint alleges that, throughout the Class Period, Intelligroup issued numerous statements and filed quarterly and annual reports with the United States Securities and Exchange Commission regarding the Company's current financial performance and future earnings. As alleged in the complaint, these statements were materially false and misleading because Intelligroup knew, but failed to disclose:
(i) that Intelligroup was materially overstating its financial results by engaging in improper accounting practices.
(ii) that the Company lacked adequate internal controls and was therefore unable to ascertain its true financial condition; and
(iii) that as a result of the foregoing, the values of the Company's revenues, net income and earnings before interest, taxes, depreciation, and amortization were materially overstated at all relevant times.
On September 24, 2004, the Company shocked the market when it issued a press release announcing its intention to restate its previously issued financial statements filed on Form 10-K for the years ended December 31, 2003, 2002 and 2001 and filed on Form 10-Q for the quarterly periods beginning January 1, 2001 to date. Upon this shocking news, shares of the Company's stock fell almost 32% to close at $1.13 per share, on unusually heavy trading volume.
