Peoplesoft faces malpractice charges

Peoplesoft has been showered with class action lawsuits, which accuse the company of malpractice and misrepresentation in handling the spin-off of its Momentum research and development arm as well as its acquisitions of Intrepid and Pman.

The move follows the enterprise resource application supplier's announcement at the end of last month that its fourth-quarter figures were below analysts' expectations and that it intended to axe six per cent of its workforce.

But a lawsuit filed by shareholder Dennis Johnson ties the Intrepid and Momentum deals to forecasts, subsequent results and insider trades. Johnson also alleged that Peoplesoft executives sold out at a time when they knew the share price could be adversely affected, but made substantial profits in the process.

The suit also alleged that Dave Duffield, chief executive of Peoplesoft, benefited, directly or indirectly, to the tune of $162.4 million, while his brother Al netted $12.8 million - despite knowing the company's performance would decline.

A further claim alleged that Cyril Yousani, a Peoplesoft board member, who was at Informix when it was implicated in a $300 million accounting irregularity, also benefited from share dealing.

Peoplesoft refuted the suggestions, maintaining that insiders benefited to the tune of $232 million in share sales during the period covered by the lawsuits.