Shareholders filed a class action against VeriFone Holdings Inc. in response to the San Jose terminal maker's announcement that it would restate its earnings for three quarters.
Girard Gibbs LLP, a San Francisco law firm, said Wednesday that it had filed the suit in the U.S. District Court for the Northern District of California, naming the terminal company and its chief executive, Douglas G. Bergeron, as defendants.
VeriFone's stock dropped by almost half after the company announced Monday that it had overstated its inventory and understated its costs of goods for the first three quarters of the fiscal year that ended Oct. 31.
Girard Gibbs said that VeriFone had violated generally accepted accounting principles and misrepresented its financial condition to investors and to the Securities and Exchange Commission.
The law firm also said that VeriFone executives had sold their own shares before the announcement.
According to SEC filings last week, Mr. Bergeron sold 43,300 shares for $44.70 to $46.43 each under a prearranged trading plan.
By midday Wednesday, VeriFone's stock had dropped 1.5% from Tuesday's close, to $23.95 a share. On Monday the shares fell 45.8%.
