Several Parametric Technology shareholders filed a class-action suit against the company yesterday, accusing it of artificially inflating its market price by making misleading statements.
The suit, filed in U.S. District Court for the District of Massachusetts, says that Parametric gave false assurances that, despite a downgrade by a leading analyst, the company remained on track to meet its estimates and its falling market price was an overreaction.
The company, in direct contradiction to the assurances made a few days earlier, admitted that revenues for the quarter that ended July 4 would be approximately $50 million below the estimates, the suit contends.
Parametric shares plunged on the news to $16.06 on July 2 from its previous close of $24.81, dropping the stock's value by a third.
The suit also asserts that prior to disclosing the company's true business prospects, corporate insiders traded 478,458 shares of common stock at near record high prices for more than $10 million.
The suit was filed on behalf of investors who purchased Parametric stock between June 26 and July 1. Parametric, based in Waltham, Massachusetts, makes manufacturing and computer aided design software. The company could not be reached for comment.