Pemstar accused of inflating stock price
From staff and wire reports
MINNEAPOLIS -- More shareholder lawsuits accusing Pemstar Inc. of distributing misleading financial information now are cropping up in Minnesota courts as the stock languishes below the $1 mark.
The latest lawsuit, filed in Hennepin County District Court this week, contends that insiders at the 4,000-employee Rochester-based manufacturer of electronic components used the misleading information to sell shares at artificially inflated prices in a secondary stock offering last year.
That lawsuit is in addition to four others filed in U.S. District Court in Minneapolis that maintain Pemstar manipulated its inventories and bolstered its financial condition with sales to companies that were hard-pressed to make payments because of their own financial condition.
Pemstar officials have denied all the allegations, saying they are without merit and that the claims ignore the general malaise in the technology sector.
Pemstar says it outlined risk factors before it sold stock last summer -- specifically, that its future was tied to the strength of the technology market.
The latest lawsuit alleges that several officers reaped large profits by selling shares at the time of the secondary offering, before the stock plunged.
Specifically, it says that Chairman and CEO Allen Berning sold 35,000 shares for $472,500 and former Executive Vice President Robert Murphy sold 100,000 shares for $1.35 million.
The lawsuit also cites stock sales by four current executive vice presidents: Robert Ahmann, 50,000 shares for $675,000; Steve Petracca, 61,423 shares for $829,000, and Karl Shurson and Hargopal Singh, 100,000 shares each for $1.35 million apiece.
The lawsuit seeks an unspecified amount of financial damages.