A federal judge has dismissed a shareholder class action brought against VeriFone Systems Inc. following a restatement of three quarters from its 2007 fiscal year caused by accounting errors, VeriFone announced Wednesday.
In a Securities and Exchange Commission filing, VeriFone said the lawsuit's dismissal also means that plaintiffs will not be able to amend the complaint and refile, though they could appeal the U.S. District Court for the Northern District of California's March 8 ruling.
The San Jose, Calif., point of sale terminal maker had no further comment, a VeriFone representative said.
The suit stemmed from the company's admission in December 2007 that accounting errors required restating the results for the first three quarters of fiscal 2007. The court consolidated nine separate lawsuits into one in 2008.
At that time, Douglas G. Bergeron, VeriFone's chief executive, said the company's accounting system did not automatically input the value of inventory moving between VeriFone locations in Singapore; Sacramento, Calif.; and Tel Aviv, Israel. As such, someone had to manually post the numbers, he said.
That procedure was correct and required, but it was after someone incorrectly determined that direct shipments also had to be manually entered that the errors surfaced, Bergeron said.
The double entries were not found until VeriFone's annual audit in 2007.
Having this matter behind the company is a positive for VeriFone, especially as it embarks on an acquisition of rival Hypercom Corp. of Scottsdale, Ariz., said Gil B. Luria, an analyst at Wedbush Securities Inc. of Los Angeles.
The companies expect to close the deal, which will not include Hypercom's U.S. operations, later this year.
"The dismissal of the lawsuit removes a lingering overhang and liability," Luria said.
"However, most investors have assumed this would not be an issue since the SEC has already settled with VeriFone and its CEO," he said.
In its 2009 settlement with the SEC, VeriFone said it was not accused of "intending to misstate its financial results or to mislead anyone."
