Rational accused of insider trading

A class action lawsuit has been filed against Rational Software, alleging insider trading by some of its executives.

The complaint, which was filed in the US District Court for the Northern District of California, charges Rational, some of its officers and directors and brokerage firm Cowen & Co with insider trading through the trading day of 8 October.

The class action alleged that Rational provided material inside information to Cowen & Co that 'revenue growth and earnings per share for financial year 99 will be lower than current analyst published estimates'.

Based on that information, Cowen sold or helped in the sale of Rational shares, the allegations claimed. It was not until 4.39pm, said the class action, that the same information was made public.

When the news broke, Rational's stock price fell by 30 per cent from $15 to $10.

Last week, the developer confirmed that its results for the second quarter of 1997 showed a net loss of 74 cents per share. The company refused to comment further.

Rational Software provides software development tools and services, which automate the development of software applications.