The floodgates of lawsuits against Red Hat opened on Thursday and Friday after the Linux software and services firm disclosed Tuesday it was reexamining its financials.
Joining the list of firms filing or investigating plans to instigate class action suits include Schatz & Nobel of Hartford, CN; Much Shelist Freed Denenberg Ament & Rubenstein, P.C. of Chicago; Berman DeValerio Pease Tabacco Burt & Pucillo of Boston; Scott + Scott of Colchester, CN; Schiffrin & Barroway of Bala Cynwyd, PA; Lerach Coughlin Stoia & Robbins LLP of San Diego, CA; and Berger & Montague, P.C. of Philadelphia, PA.
Red Hat (Nasdaq RHAT) shares plunged 23 percent on Tuesday when the company announced its financial review to close at $15.73. It traded at $15.15, down 38 cents, on Friday. The stock is down more than 40 percent since June 1 when the company announced its chief financial officer, Kevin Thompson, was stepping down.
Through all the bad news last week, Red Hat stock was upgraded by Caris & Company to “above average” from “average”.
The Red Hat financial situation drew some rather scathing remarks from George Mannes, a senior writer for TheStreet.com. He ranked Red Hat’s actions in his “Five Dumbest Things on Wall Street This Week”.
“More alarming than the revelation of the now-discredited policy — after all, who among us hasn’t slid revenue forward 20 days every now and then? — are some of the disclosures the company made in the course of explaining the revenue problem to analysts,” Mannes wrote.
Mannes said he didn’t find Red Hat remarks about the accounting problem as “reassuring”.
Red Hat may also have to make changes in its annual report.
The stock sellout, criticism and lawsuits came despite Red Hate’s statement addressing four points:
Red Hat said last week that it hoped to post new details with the SEC by Monday. July 19.
Red Hat: www.redhat.com