A federal judge has dismissed a shareholder class-action lawsuit brought against VeriFone Systems Inc. following a restatement of three quarters from its 2007 fiscal year caused by accounting errors, VeriFone announced March 9.
In a U.S. Securities and Exchange Commission filing, VeriFone says the suit’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.-based point-of-sale terminal maker had no further comment, a VeriFone spokesperson says.
The suit stemmed from a December 2007 company admission 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 CEO, 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 Scottsdale, Ariz.-based rival Hypercom Corp., says
Gil B. Luria, an analyst at Los Angeles-based Wedbush Securities Inc. 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 tells ISO&Agent Weekly. “However, most investors have assumed this would not be an issue since the SEC has already settled with VeriFone and its CEO.” VeriFone settled with the SEC in 2009.
