FalconStor Software, Inc. Under Investor Investigation

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Company Name(s): 
FalconStor Software
Affected Securities: 

An investigation on behalf of investors of FalconStor Software, Inc. (NASDAQ:FALC) over possible legal claims concerning potential securities laws violations in connection with the resignation of FalconStor President, CEO and Chairman of the Board.

FalconStor Software, Inc., located in Melville, New York, is a provider of disk-based data protection. FalconStor delivers data protection solutions that facilitate the availability of business-critical data. FalconStor Software, Inc. reported an increase in its 12 month revenue from $55.06million in 2006 to $89.46million in 2009. Nevertheless its Net Income for the same time periods stayed at a Net Loss of $3.38million, respectively $3.09million in 2009.

Shares of FalconStor Software, Inc. (NASDAQ:FALC) traded during 2006 at almost $10 per share. During 2007 FALC shares reached its all time high of $13.95 per share, before declined in 2008 to as low as $2.15 per share. During 2009 FALC shares were able to regain value and reached over $5 per share. Its current 52weekHigh was at $5 per share.

On September 29, 2010, FalconStor Software, Inc disclosed that its President, CEO and Chairman of the Board, ReiJane Huai, resigned from all of his positions with FalconStor Software, effective immediately. According to the company's statement, "Mr. Huai tendered his resignation following his disclosure that certain improper payments were allegedly made in connection with the Company's contract with one customer. The Company has fully cooperated with law enforcement authorities with respect to the ongoing investigation, and it will continue to do so. In addition, a special committee of the Board has been formed to conduct a full internal investigation of these matters and the special committee has retained counsel to assist it in its investigation." Shares of FalconStor Software, Inc. (NASDAQ:FALC) declined following the announcement from $3.98 per share to $2.64 per share, almost the lowest trading price during 2008 or almost 34% decline during September 29, 2010.