Peregrine Systems Inc.

Paper Summary:

The paper discusses Peregrine Systems Inc. which had a security fraud class action brought on behalf of purchasers of the common stock. The lawsuit concerned violations of federal securities because they had misleading statements that inflated the price of the securities. Two of the company's top two officers resigned. This paper, written in the form of a memo, investigates what happened to the accounting system of Peregrine Systems and how problems like these can be avoided in the future.

From the Paper:

"There is quite a difference from 1999 to 2001. Peregrine may have been using false accounting to inflate sales until they started the company filed Chapter 22 processes and different auditors found mistakes. Continually they had boasted that the company was doing well during 1999 to 2001. They boasted that the effect of September 11th tragedy had total revenue showing the strength of the company. After the false records were revealed the securities failed to approximately $.7 to $.08 per share. The net loses is approximately $.32 to $.33 per share. The Peregrine shares lost over 49% of their value to these problems.
Peregrine misled the public by inflating their prices of their common stock. They publicly and purposely misled the public. They mislead the public concerning the true status of the company. The company gave adverse information about the company in its accounting, reporting and financial status."

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