Xerox Corporation (NYSE:XRX) Investor Filed Lawsuit Over Alleged Breaches Of Fiduciary Duties By Certain Directors

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Company Name(s): 
Xerox
Case Name: 
Xerox Shareholder Derivative Lawsuit 09/28/2015
Case Status: 
Lawsuit Filed
Affected Securities
NYSE: XRX
Lawsuit Overview
Type of Lawsuit: 
Shareholder Derivative Action
Date Filed: 
09/28/2015
Summary: 

October 06, 2015 (Shareholders Foundation) - An investor in shares of Xerox Corporation (NYSE:XRX) filed a lawsuit against certain directors of Xerox Corporation over alleged wrongdoing that caused damages to the company and its shareholders.

The plaintiff alleges that the defendants breached their fiduciary duties by filing financial statements premised on inflated Affiliated Computer Services Inc. unit revenue figures from before the $6.4 billion deal. The plaintiff claims that Xerox’s leadership should have discovered Affiliated Computer Services Inc’s bad accounting through due diligence ahead of the acquisition, and the fudged figures should not have been reflected in Xerox’s financial statements.

In October 2013 Xerox Corporation said the Securities and Exchange Commission has launched an investigation into certain accounting practices at its Affiliated Computer Services Inc. unit, which the business-services company acquired in 2010.

Last year two former Affiliated Computer Services Inc executives settled with the SEC over claims that they padded Affiliated Computer Services Inc’s revenue by arranging to redirect pre-existing transactions through the company.

The plaintiff said that, while he had served a demand on the Xerox Corporation board in October 2013, shortly after the disclosure of the SEC probe, asking Xerox Corporation to investigate and take action against directors and officers who might have breached their fiduciary duties, the demand was rejected after a deficient and unreasonable investigation.

The plaintiff asked the court to order restitution from the defendants for their alleged breaches of fiduciary duty and seeks corporate governance reforms at Xerox Corporation to prevent similar occurrences in the future.

Xerox Corporation reported that its annual Total Revenue declined from over $21.90 billion in 2011 to $19.57 in 2014 and that its respective Net Income decreased from over $1.27 billion to over $1.08 billion. Shares of Xerox Corporation declined from $14.32 per share in late 2014 to as low as $9.60 per share on September 28, 2015.