Lovell & Stewart and Sirota & Sirota Announce Securities Fraud Class Action Lawsuit Against Tibco Software Inc., Certain Officers, Investment Banks

Business Wire, August 21, 2001

Business Editors & Legal Writers

NEW YORK--(BUSINESS WIRE)--Aug. 21, 2001

The law firms of Lovell & Stewart, LLP ((212) 608-1900 or www.lovellstewart.com) and Sirota & Sirota, LLP ((212) 425-9055 or www.sirotalaw.com) filed a class action lawsuit on August 21, 2001 on behalf of all persons and entities who purchased, converted, exchanged or otherwise acquired the common stock of Tibco Software Inc. (NasdaqNM:TIBX) between July 13, 1999 and August 15, 2001, inclusive.

The lawsuit asserts claims under Section 11, 12 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC thereunder and seeks to recover damages. Any member of the class may move the Court to be named lead plaintiff. If you wish to serve as lead plaintiff, you must move the Court no later than September 4, 2001.

The action, Pfeiffer v. Tibco Software, Inc., is pending in the U.S. District Court for the Southern District of New York (500 Pearl Street, New York, New York) and has been assigned to the Hon. Shira A. Scheindlin, U.S. District Judge. The complaint alleges that Tibco Software Inc. and Vivek Y. Ranadive and Paul G. Hansen, its CEO and Chief Financial Officer, respectively, violated the federal securities laws by issuing and selling Tibco common stock pursuant to the initial public offering without disclosing to investors that at least three of the underwriters of the IPO and at least one of the underwriters of Tibco's secondary offering had solicited and received excessive and undisclosed commissions from certain investors.

In exchange for the excessive commissions, the complaint alleges, The Goldman Sachs Group, Inc., the co-lead underwriter of both the IPO and secondary offering, and Credit Suisse First Boston Corp. and FleetBoston Robertson Stephens, Inc., two of the underwriters of the IPO, allocated Tibco shares to customers at the IPO price of $15.00 per share. To receive the allocations (i.e., the ability to purchase shares) at $15.00, the defendant underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices.

The requirement that customers make additional purchases at progressively higher prices as the price of Tibco stock rocketed upward (a practice known on Wall Street as "laddering") was intended to (and did) drive Tibco's share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the defendant underwriters and their customers to reap enormous profits by buying Tibco stock at the $15.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $40.00 during Tibco's first day of trading. The complaint further alleges that Tibco was able to price its secondary offering at the artificially high price of $106.00 per share due to the continuing effects of the foregoing violations.

Rather than allowing their customers to keep their profits from the IPO, the complaint alleges, the defendant underwriters required their customers to "kick back" some of their profits in the form of secret commissions. These secret commission payments were sometimes calculated after the fact based on how much profit each investor had made from his or her IPO stock allocation.

The complaint further alleges that defendants violated the Securities Act of 1933 because the Prospectuses distributed to investors and the Registration Statements filed with the SEC in order to gain regulatory approval for the Tibco offerings contained material misstatements regarding the commissions that the underwriters derived from the IPO and failed to disclose the additional commissions and "laddering" scheme discussed above.

Christopher Lovell, the senior partner at Lovell & Stewart, has been appointed lead counsel or co-lead counsel in numerous significant class actions in which class members have recovered all or almost all of the losses (exclusive of interest). These include actions involving reportedly the largest class action recoveries in history under three separate federal statutes (the Sherman Antitrust Act, the Commodity Exchange Act, and the Investment Company Act of 1940). These record-breaking recoveries for class plaintiffs included the $1.027 billion recovery in In re: NASDAQ Market-Makers Antitrust Litigation and a $145.35 million recovery in 1999 in In re: Sumitomo Copper Litigation, a class action against various parties who conspired to manipulate the worldwide copper and copper futures markets for their own profit.

Howard Sirota and the Sirota & Sirota firm have taken leadership roles in numerous high-profile and legally significant cases, including serving as Chairman of the Executive Committee of plaintiffs' attorneys in the landmark In re: Crazy Eddie Securities Litigation case ($93 million recovery for class, with additional payments from defendants expected in the future) and serving as a member of the Executive Committee in In re: Structural Dynamics Research Corporation ($37.5 million recovery).