Avant! Corp, hit with felony charges in April for allegedly stealing technology from competitor Cadence Design Systems Inc (CI No 3,141), is now facing a shareholder class action suit stemming from the same misconduct. The suit was filed on Friday in US District Court for Northern California on behalf of investors who purchased the company’s stock between March 29, 1996 and April 11 of this year, when the company and its top executives were charged with conspiracy and theft of trade secrets. The class action suit charges that Avant! misled shareholders by withholding adverse information about its wrongful use of the proprietary software technology stolen from Cadence. It claims that in the period following a civil action by Cadence and prior to the filing of criminal charges and the arrest of company executives, Avant! had assured shareholders that there was nothing to the allegations and that they would have no material impact on the company’s financial position. In the week after the criminal charges were filed, however, Avant! shares – trading at over $24 – dropped to an all-time low of $9.75. The shares have since crept steadily upwards, closing at $22.125 on Monday, down $0.875 for the day. In the meantime, the company says, at its annual meeting on May 15 shareholders re- elected chairman Gerald Hsu and the entire board with 99% of the votes cast. An attorney representing the class in the suit discounted the significance of such a claim, saying that voting rights and procedures among shareholders can produce misleading results.
