Openwave Systems Case 2/21/2007
The complaint charges Openwave and certain of its officers with violations of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder by the United States Securities and Exchange Commission (the “SEC”), and Section 20(a) of the Exchange Act.
Specifically, the complaint alleges that in 2000 and 2001, the senior executives of Openwave caused the Company to grant to its executives and certain other employees of the Company stock options that improperly had exercise prices below the market price of Openwave stock on the actual date of grant. The Company and the Individual Defendants (defined below) failed to disclose this fact, and instead issued numerous false and misleading public statements misrepresenting the Company’s financial statements, including its accumulated deficit, in violation of generally accepted accounting principles (”GAAP”). When these improper grants and the improper accounting concealing them were finally revealed to the public, the price of Openwave stock declined dramatically, causing substantial damages to investors.
The complaint further alleges that on or around December 1, 2006, the Company issued a press release and filed its Form 10-K for the fiscal year ended June 30, 2006 (the “2006 10-K”) disclosing, for the first time, that its previously reported financial results were inaccurate and were being restated. Specifically, the Company increased its accumulated deficit by $182 million to correct for option expenses that were improperly under-reported between 2001 and 2005.