Legal problems at industrial PDA and mobile systems vendor Symbol Technologies Inc continue to rumble on after the company and two former officers were hit with a federal class action lawsuit late last week. This comes a year after the company settled a rash of shareholder lawsuits over accounting fraud.
The latest lawsuit, filed in the US District Court for the Eastern District of New York, alleges among other things that Symbol violated the Securities Exchange Act of 1934 by issuing false or misleading statements concerning the prospects, financial results, and financial controls of Symbol during the period from May 2004 to August 2005.
In addition to Symbol, the suit names William Nuti, who ran Symbol through its recovery from two years of financial scandal and government probes before resigning earlier this month, and Mark Greenquist, the former CFO who resigned this summer.
The Holtsville, New York-based company said it is reviewing the complaint and intends to defend the suit vigorously.
Symbol is no stranger to the courtroom. It is also embroiled in a bitter legal battle with data-capture company Intermec Technologies Corp that started in March when Symbol filed a lawsuit alleging that Intermec had infringed its wireless communication patents. Just two days later Intermec countersued, charging Symbol with infringement of its wireless access, terminal and software technology patents. On March 10, Symbol terminated its supplier relationship with Intermec for laser-scan engines that Intermec used in its barcode scanning equipment.
Prior to this, in June 2004, Intermec filed an RFID-related patent-infringement lawsuit against Matrics Inc, a company that Symbol acquired three months later.
The bitter animosity with Intermec continues, especially after the US International Trade Commission said in early August that at the request of Intermec it was investigating Symbol for allegedly violating import trade practices.
But it isn’t just other companies Symbol has had to contend with. In recent years, the company has been engulfed in an accounting scandal, and has also seen the departure of four CEOs since 2000. More recently, in July it parted company with its CFO Mark Greenquis, and in June it cut its workforce by 13%, or 700 jobs, blaming the downturn on the retail sector. The last CEO to leave was William Nuti, who was recently appointed the head of NCR Corp.
Nuti had been credited by some as almost single-handedly turning around Symbol from the accounting scandal in late 2003 that caused the company to restate almost five years of earnings and pay a $140m fine. The CEO at the time, Tomo Razmilovic, faced criminal charges, and so fled the country and was declared a fugitive by federal prosecutors.
In 2003, Robert Korkuc, former Symbol chief accounting officer, pleaded guilty to securities fraud at a federal court. The SEC filed a civil suit against Korkuc alleging that he rigged the company’s financial results by manipulating millions or dollars in revenue, net income, and other measures of financial performance from 1998 through 2002.
Subsequently, Dr Jerome Swartz quit as chairman, director, and chief scientist after accepting responsibility for the fact that an accountancy fraud occurred during his tenure of office. Executive vice president Leonard Golder also left the company
Meanwhile, former CFO Kenneth Jaeggi, along with seven other former executives of Symbol have been charged with fraudulently manipulating the company’s financial statements in an effort to manage earnings. Jaeggi denies the allegations, and is scheduled to go to trial in November.
Founded in 1975, Symbol is a global, $1bn-plus company with operations in more than 50 countries.