Investor Files Derivative Suit Over Tableau Competition Disclosures
The lawsuit comes after the company's stock sank nearly 50 percent after the market got wind of the toll competition was having on it.
August 07, 2018 at 04:21 PM
3 minute read
An investor in Tableau Software Inc. has accused the business analytics firm's board of hiding the affect that competition from Amazon, IBM and Microsoft would have on the company's bottom line.
The lawsuit, filed Tuesday in Delaware federal court, comes just over a month after a Manhattan judge terminated the company's motion to dismiss a securities class action stemming from a nearly 50 percent drop in Tableau's stock in 2016 after the market caught wind of the toll new competition was taking on its business.
The derivative suit, however, seeks to shift any liability to Tableau's individual directors, claiming that breaches of fiduciary duty by the board caused the company to make misleading public statements and later spend “many millions of dollars” cleaning up the damage.
In the complaint, Tableau investor Abdullah Ansary said the directors knew by early 2015 that increased competition was leading customers to delay or cancel licensing orders for Tableau's software products and slowing what had been a robust growth rate for the Seattle-based firm.
The complaint said Tableau's regulatory filings excluded warnings about the impact on sales, and it cited comments from Thomas E. Walker Jr., the firm's former CFO, who said publicly that he viewed competition as a “net positive.”
The first signs of trouble for investors came in January 2016, when Tableau's vice president of sales left the company, in a move that Ansary said signaled the instability of Tableau's sales operations. One month later, Tableau announced it expected its first quarter revenue growth for 2016 to decline significantly. The company also said it was recording a tax valuation allowance, meaning it would likely be unable to generate enough future income to realize the benefits of $46.7 million in deferred income tax assets.
According to the complaint, Tableau's stock tanked 49.4 percent overnight to close at $41.33 per share on Feb. 5, 2016, compared to a trading price of $81.75 the day before.
The alleged disclosures became the target of a securities class action filed in 2017, accusing the company of making false and misleading statements in regulatory filings with the U.S. Securities and Exchange Commission. In July, U.S. District Judge John G. Koeltl of the Southern District of New York terminated Tableau's motion to dismiss the case.
Koeltl's order spared a response from plaintiffs' firms, including Robbins Geller Rudman & Dowd, which said on July 31 it was investigating potential breaches of fiduciary duties by the Tableau directors.
Tuesday's complaint, filed by The Brown Law Firm and the Rosen Law Firm in New York, accused directors of selling tens of millions of dollars in Tableau shares to keep the stock inflated. It also challenged the independence and disinterestedness of the board, saying a majority of directors faced a substantial threat of personal liability associated with the derivative allegations.
Tableau's press shop did not immediately respond Tuesday to an email seeking comment on the complaint.
The Farnan LLP law firm in Wilmington is acting as local counsel in the case, which has not yet been assigned to a judge.
The case is captioned Ansary v. Chabot.
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