Stock in Cree plunged 12.3 percent in value shortly after markets opened today before rallying a bit after Cree disclosed an informal inquiry by the Securities and Exchange Commission.

In a filing with the SEC on Wednesday, Cree said it also was opposing a preliminary injunction sought by co-founder Eric Hunter in which Hunter and his wife Jocelyn alleged they had been harassed.

Cree stock fell $2.31 to $16.45 at 11 AM then rallied a bit to close the day at $16.50. The 12 percent loss in share price was driven by 8.3 million shares being traded – nearly four times the typical daily volume.

The Cree filing reads in part:

“Cree also confirmed that the SEC recently has requested that it provide information in response to an informal inquiry. Although Eric Hunter has not been actively involved in management since 1995, he is one of the Company’s founders and the Company is not surprised that the SEC would want to evaluate his allegations. The Company’s management looks forward to providing the information requested.”

Cree has become embroiled in lawsuits filed by Eric Hunter against the company which he helped found and was chief executive officer of at one time. Since Hunter announced his $3 billion lawsuit against Cree and his brother, Neal, alleging a variety of SEC violations. A number of class action suits also have been filed.

Cree pointed out that numerous affidavits have been filed that dispute the harassment allegations raised by the Hunters. Cree said in the filing:

“On July 9, 2003, Cree filed an opposition to the motion for preliminary injunction filed by Eric Hunter and his wife, Jocelyn Hunter, asking the court to enjoin alleged conduct constituting harassment. Cree asked the court to deny the motion for preliminary injunction and set a hearing on the request. Cree provided an affidavit of its Chief Executive Officer, Chuck Swoboda, stating that Cree has never instructed or authorized anyone to follow Eric or Jocelyn Hunter. Also on July 9, 2003, Neal Hunter filed an additional affidavit in support of his opposition to the motion for preliminary injunction. The affidavits filed by Neal Hunter or Cree to date include affidavits from C.D. Thompson, a Wildlife Commissions officer; Annabel Harrill, Eric Hunter’s mother; John Mitchell, extended family member; Jeff Hunter, Eric Hunter’s brother; Neal Hunter; Janet Hunter, Neal Hunter’s spouse; Monica Hunter, Neal Hunter’s former spouse; Darlene Tallent, business acquaintance of Eric Hunter; John Edmond, one of the co-founders of Cree; and Chuck Swoboda, CEO of Cree. Cree believes that these affidavits completely refute the allegations of harassment made by Eric Hunter and Jocelyn Hunter in their motion papers and raise serious questions about their credibility.”