Accounting & Tax

Lawsuits for Symbol, Former Executives

Last month the bar-code company the company implicitly linked the departure of its finance chief with a simultaneous announcement that the company ...
Stephen TaubAugust 18, 2005

Fresh off a major accounting scandal, bar-code company Symbol Technologies Inc. is facing a new round of litigation.

The Holtsville, New York-based company, as well as former chief executive officer William Nuti and former chief financial officer Mark Greenquist, are the targets of at least four class-action lawsuits stemming from last year’s series of restatements.

In the latest suit, the law firm of Murray, Frank & Sailer LLP asserted that despite various initiatives intended to materially improve its internal controls and procedures, “Symbol’s internal controls and financial systems were inaccurate.”

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It noted that Symbol was required to revise financial statements for the first three quarters of 2004; revise financial projections for much of fiscal 2005 by understating expenses requiring massive charges against earnings; and acknowledge that its financial and internal controls were defective and inadequate for the purpose of any meaningful and accurate financial projections when it replaced Greenquist as CFO.

The law firm also accused the company, as well as Nuti and Greenquist, of failing to disclose that demand for the company’s products was “materially declining such that its earnings guidance was lacking in a reasonable basis and therefore materially false and misleading.” These actions caused Symbol’s share price to fall nearly 50 percent, the plaintiffs charged.

In a press release, the company said “Symbol is reviewing the complaint and intends to defend the suit vigorously.”

In July, when Greenquist left the company, Nuti reportedly insisted during a conference call that the CFO was “not being fired.” However, the company implicitly linked the departure with a simultaneous announcement that the company is revising downward its second-quarter revenue projections. As for Nuti, who ran Symbol Technologies during its transition from its prior scandal, earlier this month he became the chief executive officer of NCR Corp.