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Shareholders sue Citrix

Shareholders file a class-action suit against the networking software firm, citing a failure to disclose information about Microsoft competition.

Citrix Systems (CTXS) shareholders today said they filed a class-action lawsuit against the networking software company, citing a failure to disclose material information in a timely manner.

Under the complaint, the lawsuit alleges the company and four of its officers and directors failed in January to disclose information they held in their possession that Microsoft was developing a product that would compete with Citrix's core products.

And once information began to surface in the market that the software giant was preparing such a product, the company "falsely denied the rumors," the shareholders allege.

"While in possession of this information, four of the defendants in the complaint..sold in excess of 71,000 shares of common stock at prices from $45 to $50 per share for total proceeds of over $3.38 million," the suit alleges.

The stock began to tumble shortly thereafter to the $30 range. But on February 27, Citrix's stock lost nearly 60 percent of its value following an announcement by the company that Microsoft was looking to develop features for its Windows NT operating system that would compete with Citrix's WinFrame software. That software serves as a way for multiple users to access enterprise applications over internal or remote connections.

The stock today closed at 14-1/2, up 5/8 from yesterday.

In heavy trading, Citrix's stock dropped to 10-5/8, down 15-5/8, on that February day.

Michael Pucillo, an attorney for the plaintiffs, said it's hard to determine the size of the damages at this point.

But he noted that 9 million shares were traded in 6,000 transactions between January 21 to February 26, which is the period for the class action. The average daily trading volume is usually 339,000 shares, Pucillo said.

Citrix representatives could not be reached for comment.

The stock today closed at 14-1/2, up 5/8 from yesterday.