SAN FRANCISCO Pleading standards for securities fraud cases may be high, but they’re not insurmountable, the Ninth Circuit declared Friday, reviving a $1.8 billion shareholder action against VeriFone Holdings.
Despite the SEC’s decision not to charge VeriFone CEO Douglas Bergeron and CFO Barry Zwarenstein, shareholders sufficiently pleaded that the two pressured middle management to meet unrealistic earnings targets, then turned a blind eye when a controller fabricated inventory to make the numbers, Judge M. Margaret McKeown wrote for a unanimous panel in In re VeriFone Holdings Securities Litigation. When the fabrications were discovered in December 2007, the stock price dropped nearly by half in a single day, representing a loss of $1.8 billion in market cap.
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