Redback Networks Class Action Lawsuit Filed Over Misleading Securities Practices

Strategic Insights -

A class action lawsuit was filed on behalf of investors who purchased Redback Networks, Inc. securities during a specific period, alleging that the company's financial results were artificially inflated due to a sales pact with Qwest Communications and subsequent SEC investigation. The lawsuit seeks to recover damages on behalf of class members and is represented by the law firm of Schiffrin & Barroway, LLP. Redback ultimately filed for bankruptcy in November 2003.

Key Takeaways:

  • The class action lawsuit was filed in the United States District Court for the Northern District of California on behalf of investors who purchased Redback Networks, Inc. securities between April 12, 2000, and October 10, 2003 (Source: Schiffrin & Barroway, LLP).
  • The complaint alleges that Redback's financial results were artificially inflated due to a sales pact with Qwest Communications, which called for Qwest to purchase large quantities of Redback merchandise in exchange for shares of Redback stock (Source: Schiffrin & Barroway, LLP).
  • The lawsuit charges Joel M. Arnold, Thomas L. Cronan III, Kevin A. DeNuccio, Peter Lamond, Vinod Khosla, Vivek Ragavan, and Dennis P. Wolf with violating Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (Source: Securities Exchange Act of 1934).
  • Redback's stock price fell 7.1% to $0.51 per share on October 13, 2003, after the company announced an SEC investigation (Source: Schiffrin & Barroway, LLP).
  • Redback filed for Chapter 11 bankruptcy protection on November 3, 2003, and the company's stock price fell 18.18% to $0.36 per share on the same day (Source: Schiffrin & Barroway, LLP).
  • Schiffrin & Barroway, LLP, the law firm representing the class, has recovered over $1 billion on behalf of institutional and high net worth individual investors (Source: Schiffrin & Barroway, LLP).

Statistics:

  • 7.1% decline in Redback's stock price on October 13, 2003, following the announcement of the SEC investigation (Source: Schiffrin & Barroway, LLP).
  • 18.18% decline in Redback's stock price on November 3, 2003, after the company filed for bankruptcy protection (Source: Schiffrin & Barroway, LLP).
  • Over $1 billion recovered by Schiffrin & Barroway, LLP, on behalf of institutional and high net worth individual investors (Source: Schiffrin & Barroway, LLP).

Sources:

  • Schiffrin & Barroway, LLP
  • Securities Exchange Act of 1934
  • http://www.sbclasslaw.com/