Bay Stands Firm In Legal Wrangle

The company claims accusations of misinformation are ?without merit?

Bay Networks claimed it would vigorously defend itself against lawsuits filed by two shareholders, which allege the company artificially inflated its share price by making misleading statements about its products and market position.

The two separate filings are both class action suits seeking damages on behalf of all shareholders who bought Bay common stock between 25 July 1995 and 14 October 1996. They claim that these shareholders were misled about the value of their holdings by ?materially false and misleading statements? from Bay.

The plaintiffs also allege that 10 of Bay?s current and former officers and directors profited from trading on undisclosed information.

In an official statement, Bay said the suits were ?without merit? and it would contest them vigorously. But it would not comment further.

One of the suits was filed in the US district court for the northern district of California, citing breaches of federal securities laws. The other was filed in Santa Clara County, focusing on alleged violations of the California Corporations Code.

The actions were sparked by last October?s sharp fall in Bay?s stock after it reported first quarter results well below Wall Street expectations.

They come at the same time as Bay?s appointment of Graeme Allan to UK sales and marketing director. Allan moved to Bay a year ago from Novell, where he had been European marketing director.

The job was created after the departure of David Grant, Bay UK?s former sales director, who left two weeks ago.

Allan said he has noticed a marked deterioration in the way the user perceives the channel. ?They are starting to lose touch with what the channel is doing for them.?