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Tibco Software Inc. on Thursday was sued by a New York law firm that claimed the software company misled investors in the progress of its integration of Staffware PLC, which was acquired in 2004.
Milberg Weiss Bershad & Schulman LLP filed the class-action suit in a northern California federal court on behalf of shareholders between Sept. 21, 2004 and March 1, 2005. Tibco, an application-integration software maker, is headquartered in Palo Alto, Calif.
The suit names as defendants the company, Vivek Y. Ranadive, chief executive, president and chairman; Christopher G. O'Meara, chief financial officer; Sydney Carey, controller and chief accounting officer; and Rajesh U. Mashruwala, chief operating officer.
Tibco officials were not immediately available for comment.
The complaint alleges that the merging of Staffware into Tibco's business was not proceeding as well as defendants represented and that the acquired company was performing well below expectations, In addition, according to the suit, Tibco failed to maintain "an adequate system of internal financial, operational or disclosure controls so as to reasonably assure the accuracy, completeness and veracity of the company's public statements and representations to investors."
On March 1of this year, Tibco announced that its first quarter results would fall well below guidance and analyst estimates, which resulted in after-market trading of its stock being halted, the law firm said. At the time, the defendants said the Staffware integration was not proceeding according to plan, despite prior statements to the contrary, and that weakness in the European market and delays in closing deals were the reasons behind the poor financial performance.
Trading resumed the next day on Tibco stock, which fell in price from $8.90 on March 1 to below $7, the law firm said.
"Market commentators stated that the decline would have been worse had Tibco stock not evidenced an uncharacteristic trading pattern in the days immediately prior to defendants' belated disclosure, which indicated that the negative news may have been leaked to certain investors," the law firm said in a statement.
Tibco agreed to acquire the British company Staffware in April 2004 in a stock and cash transaction valued at $217 million. Staffware sold software for managing business processes.