A federal judge has reinstated Microsoft Corp. and SoftBank Corp. as defendants in a class-action lawsuit brought by investors in Global Crossing and its affiliate Asia Global Crossing, according to Reuters, citing court documents.
Both companies invested with Global Crossing in Asia Global Crossing, which was spun off from Global Crossing as a public company in 2000, according to the report. They also each appointed their own employees to the Asian company’s board of directors, according to the wire service.
Reuters said a Microsoft spokesman had no immediate comment, while SoftBank, the Japanese telecom giant, did not respond to a request for comment.
Microsoft and SoftBank were named defendants in the 2002 case along with Global Crossing, Asia Global Crossing, and their boards, officers, investment bank advisers, and accountants. However, the two companies were later dismissed from the case on the grounds that they were not liable for the actions of the individuals they had designated to serve on Asia Global Crossing’s board.
But the plaintiffs’ attorneys petitioned to have the two companies reinstated as defendants after they discovered documents that they say showed a “secret agreement” to defraud other investors in Asia Global Crossing.
“This ruling will allow shareholders to hold accountable two of the major players — Microsoft and SoftBank — responsible for the building-up and collapse of Asia Global Crossing,” said Jay Eisenhofer, lead attorney for the plaintiffs, in a press release.
The lead plaintiffs in the suit are the Public Employees Retirement System of Ohio and the State Teachers’ Retirement System of Ohio.
According to Reuters’s account of the judge’s order, the plaintiffs claim that Microsoft and SoftBank each pledged to purchase $100 million in telecommunications capacity from Asia Global Crossing, but told their board designees to “negotiate under the table to avoid those obligations.”
Microsoft and SoftBank kept the negotiations secret “in order to maintain the attractiveness of (Asia Global Crossing) stock to potential investors,” the order said, according to Reuters.