Manugistics faces shareholder suit

Manugistics' posting of poor financials for its first quarter ended May 31 has landed its executives in hot water with some stockholders, specifically those that bought stock during the final two months of the three month quarter.

According to the suit, which seeks to recoup losses from the slumped stock, the plaintiffs bought stock based on Manugistics' executives' claims that the quarter was off to a stellar start. But the announcement two months later that the company was going to post a loss sent the stock plummeting.

"The complaint alleges that the defendants knowingly misrepresented the business and financial operations of Manugistics with the intent of having the effect of substantially inflating the trading price of Manugistics common stock," stated the law firm of Reinhardt and Anderson in a press release. The firm filed today the class-action suit on behalf of the stockholders in U.S. District Court in Minnesota.

"The complaint further alleges that the defendants' fraudulent scheme and deceptive course of business did artificially inflate the price of Manugistics common stock during the Class Period and allowed the defendants to reap millions of dollars of insider trading proceeds," the law firm further stated.

A Manugistics spokesperson said the company has not yet seen the suit and cannot comment.

Financial analysts said these types of suits are becoming more and more prevalent and are viewed most of the time as frivolous by the courts.

"It's a nonevent," said Nathan Schneiderman, financial analyst at Credit Suisse First Boston in New York. "Unless there's evidence of wrongdoing, which rarely happens, nothing usually comes of these. You can assume when a stock price drops dramatically there's going to be a stockholder suit."