robert s. green (state bar no. 136183) green & jigarjian...
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Robert S. Green (State Bar No. 136183) GREEN & JIGARJIAN LLP 235 Pine Street, 15 " Floor San Francisco, CA 94104 Telephone: (415) 477-6700 Facsimile: (415) 477-6710
Liaison Counsel for Plaintiffs 5
Marc I. Wiliner 6 Karen E. Reilly
SCHIFFRIN & BARRO WAY, LLP 7 Three Bala Plaza East, Suite 400
Bala Cynwyd, PA 19004 8 Telephone: (610) 667-7706
Facsimile: (610) 667-7056 9
Lead Counsel for Plaintiffs 10
UNITED STATES DISTRICT COURT ill
NORTHERN DISTRICT OF CALIFORNIA 12 I
13 IN RE BEA SYSTEMS, INC. SECURITIES ) Case No. C-04-2275-SI LITIGATION
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This Document Relates To:
All Actions.
C-04-2275 -SI C-04-236 1-SI C-04-24 14-SI C-04-243 1-SI C-04-2562- SI C-04-2898- SI
CLASS ACTION
[CORRECTED] CONSOLIDATED AMENDED CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
DEMAND FOR JURY TRIAL
CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-04-2275SI
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Lead Plaintiff ARCA S.G.R. S.p.A. ("Plaintiff" or "ARCA") ,individually and on behalf of
2 all other persons similarly situated alleges the following based upon personal knowledge as to itself
3 and its own acts, and information and belief as to all other matters, based upon inter a/ia, the
4 investigation conducted by and through its attorneys, which included, among other things, a review
5 of the public documents and announcements concerning BEA Systems Corp. ("BEA Systems,"
6 "BEA," or the "Company"). United States Securities and Exchange Commission ("SEC") filings,
7 interviews with former employees of BEA Systems, wire and press releases published by and
8 regarding BEA Systems, and information readily available on the Internet. Lead Plaintiff believes
9 that substantial evidentiary support will exist for the allegations set forth herein after a reasonable
10 opportunity for discovery.
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NATURE OF THE ACTION
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1. This is a securities class action brought by Lead Plaintiff on behalf of itself and all
13 persons who purchased or otherwise acquired the common stock of BEA Systems between
14 November 13, 2003 and May 13, 2004 inclusive (the "Class Period"), seeking to recover damages
15 caused by Defendants' violation of federal securities laws and pursue remedies under the Securities
16 Exchange Act of 1934,15 U.S.C. Section 78 (the "Exchange Act"). Defendants are BEA Systems,
17 its cofounder, Chairman of the Board, President and Chief Executive Officer, Alfred S. Chuang
18 ("Chuang"), its Chief Financial Officer William M. Klein ("Klein"), its Executive Vice President
19 Charles L. Ill, III ("Ill"), and the Company's Executive Vice President Thomas M. Ashburn
20 ("Ashburn") in their capacity as officers and directors of BEA Systems.
2!
2. BEA Systems is a leading application infrastructure software company, providing
22 products that help develop, deploy, integrate, and manage enterprise-scale business applications.
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3. BEA has a leading market share in the highly competitive and maturing, billion dollar
24 application server software market, with IBM and Oracle as its primary competitors. Application
25 server software provides a critical infrastructure layer that bridges the gap between business
26 application software and network management software.
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4. On July 15, 2003, BEA Systems began shipping WebLogic Platform 8. 1, a new
28 product resulting from the Company's commitment of significant funds and twenty months of
CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-04-2275-SI
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research and development. The product, designed to distinguish BEA from its much larger
2 competitors, was favorably received by Wall Street, with the Company's stock surging $1.16 per
3 share, or 9.6 percent, closing on July 16, 2003 at $1324 per share, with more than 25 million shares
4 changing hands. Lift was also provided by Merrill Lynch's "buy" rating for the Company's shares,
5 up from "neutral" prior to the new product's shipment, and subsequent placement on Merrill's
6 "Focus One" list of company's to watch. Merrill Lynch commented that "the basis for the upgrade
7 is renewed confidence in the July second quarter, the upcoming 8.1 product cycle, the company's
8 strategic value, and improving field execution." Jason Maynard, Merrill's analyst, further stated
9 WebLogic Platform 8.1 "is technically sound and will likely provide a significant opportunity for
10 out performance in the coming quarters."
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5. Defendants formally launched WebLogic Platform 8.1 ("8.1") on August 4, 2003,
12 at a press conference. During the conference, Defendant Chuang touted the new product as
13 "revolutionary," placing the Company 2 to 3 years ahead of its competition in terms of vision and
14 ability to execute in delivering an application platform suite-- ahead of IBM and Oracle.
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6. Almost every leading industry analyst predicted the market for integration software
16 to be one of the fastest growing enterprise software segments, with the potential to grow into a
17 Microsoft Windows-like platform that provides all the building blocks for application development
18 and management, database connectivity, and network and security functions. This market was also
19 touted as being strategically significant as it provides an entre into other high growth software
20 markets such as application performance management, integration, portal, security and user access.
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7. In anticipation of the advantage held by BEA Systems' front runner position in this
22 evolving and significant market, analysts rewarded the Company with "outperform" and "buy"
23 ratings for the Company's stock. For example, on September 3, 2003, after hosting the Company's
24 meeting with investors, Soundview Technology Group issued a report reiterating their "outperform"
25 rating and target stock price ofSl6.00 per share. On September 22, 2003, SG Cowan analyst Rehan
26 Syed raised BEA Systems' rating to "outperform" on expectations of accelerated revenue growth
27 from the Company's new portal and integration products.
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CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-04-2275-SI
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8. BEA Systems' ability to remain an independent company and ward off acquisition
2 by larger corporations including Oracle and Hewlett-Packard, in the face of increasing competitive
3 pressure from IBM, Microsoft, Oracle, Sun Microsystems, and SAP, depended upon the Company's
4 showing strong financial results from the launch of 8.1. Analysts focused on licensing revenue
5 levels as a key indicator demonstrating new customers and acceptance of the 8.1 product.
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9. It is against this backdrop that Defendants' Class Period statements and conduct must
7 be viewed. With the market primed, on November 13, 2003, the first day of the Class Period,
8 Defendants reported on the Company's results for the quarter ended October 31, 2003, during an
9 analyst conference call. During the call, Defendant Chuang assured analysts that BEA had done a
10 "very, very thorough job in training our sales force on 8.1. Specifically, we have been training them
11 to sell the platform, and also going for more into the value sale for awhile." Chuang continued,
12 "[t]he sales force, I think, undeniably loves the platform sales message, because it is clear that
13 nobody has what we have. So it makes their sales cycle and the sales process much easier."
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10. In reality however, as further detailed herein, licensing revenues were already falling
15 at the time this statement was made, Defendant Chuang had knowingly and vastly overstated the
16 preparedness of the sales force for the transition to 8.1 and Defendants were aware or recklessly
17 disregarded that customers were not lining up to purchase the new product.
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11. In addition, continuing throughout the Class Period, Defendants also provided
19 knowingly false guidance regarding license revenues projections, a key indicator of sales force
20 success and customer acceptance of 8.1. In this regard, a confidential witness ("CW 1") has stated
21 that he personally provided sales forecast presentations during the Class Period, which preceded
22 many of the misstatements detailed herein. These presentations did not take place at some low level
23 employee meetings, but rather, they were made directly to certain of the Individual Defendants and
24 on behalf of the Company and most importantly, the presentations expressly contradicted the
25 forecasts being provided or which had previously been provided to analysts and the investing public.
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12. The Class Period ends on May 13, 2004, when Defendants finally revealed that (i)
27 licensing revenues were falling well below previous guidance they had provided; (ii) licensing
28 revenues were down due to slower customer transition to 8.1; and (iii) failures of the sales force
CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-04-2275-SI
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1 organization had also contributed to the deficit. As further detailed herein, in the interim, while in
2 If possession ofthis materially adverse, non-public information, Defendants collectively sold in excess
3 fi of $19 million of their personal holdings of BEA Systems stock.
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13. Throughout the Class Period, Defendants pumped up the value of the Company's
5 stock through materially false and misleading statements concerning sales force readiness to market
6 the new product, customer acceptance and demand for 8. 1, including anticipated growth in licensing
7 revenues, a key indicator of the products success, for which Defendants had no reasonable basis to
8 believe. Moreover, in addition to having actual knowledge of the falsity of many of the statements
9 alleged herein, Defendants individually profited from their false and misleading statements,
10 collectively receiving in excess of$ 19 million in proceeds from sales of Company shares during the
11 Class Period. Plaintiff suffered damages as a result of Defendants' misconduct.
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JURISDICTION AND VENUE
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14. Lead Plaintiff brings this action pursuant to 10(b) and 20(a) of the Exchange Act
14 as amended (15 U.S.C. 78j(b), and 78t(a)) and Rule lOb-S promulgated thereunder by the
15 Securities and Exchange Commission ("SEC") (17 C.F.R. 240.1 Ob-5). Representative Plaintiff
16 (defined below) also brings this action pursuant to Section 20A of the Exchange Act based upon
17 ins ider trading conducted by the Individual Defendants while in possession of material adverse non-
18 public information.
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15. This Court has jurisdiction over the subject matter of this action pursuant to 27 of
20 I the Exchange Act (15 U.S.C. 78aa) and 28 U.S.C. 1331. 21
16. Venue is proper in this District pursuant to 27 of the Exchange Act (15 U.S.C.
22 78aa) and 28 U.S.C. 1391(b). Many of the acts and transactions alleged herein including the
23 orders to sell the Individual Defendants' BEA Systems shares occurred in substantial part in this
24 District. In addition, BEA Systems maintains its principal executive offices at 2315 North First
25 Street, San Jose, California.
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17. In connection with the acts, conduct and other wrongs complained of herein, the
27 Defendants, directly or indirectly, used the means and instrumentalities of interstate commerce,
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CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C..04-2275..Si
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I I including but not limited to, the United States mails, interstate telephone communications and the facilities of the national securities exchange.
THE PARTIES
18, Lead Plaintiff purchased BEA Systems common stock during the Class Period, as set
forth in the certification previously filed with the Court and incorporated by reference, and has
suffered damages as a result of the wrongful acts of Defendants.
19, Representative Plaintiff, Arthur J. Donisi, purchased BEA Systems common stock
on December 2, 2003, as set forth on the certification attached hereto as Exhibit A. These purchases
were made contemporaneously with the sales undertaken by Defendant Klein, which were alleged
to have been made while Defendant Klein was in possession of material adverse non-public
information concerning BEA Systems. As a result of these purchases, Representative Plaintiff
.Donisi was damaged.
20. Defendant BEA Systems is a publicly held corporation organized and existing under
the laws of the State of Delaware, with its principal offices at 2315 North First Street, San Jose,
California. The shares of BEA Systems are traded on the NASDAQ under the symbol 'BEAS."
21. Individual Defendant Alfred S. Chuang ("Chuang"), co-founder of BEA Systems,
served as the Company's Chairman of the Board, President and Chief Executive Officer at all
relevant times. During the Class Period, as more fully outlined in the table below and exhibited in
his Form 4(s) filed with the SEC, Defendant Chuang sold approximately 799,000 shares of BEA
common stock for proceeds of over $10.36 million.
Range of Prices Number of at which Proceeds From
Date Name of Defendant Shares Sold Shares Sold Shares Sold
11/18/03 Alfred S. Chuang 100,000 12.2512.40 1,230,538.67
11/19/03 Alfred S. Chuang 100,000 12.06- 12.09 1,208,100.00
11/20/03 Alfred S. Chuang 100,000 12.15-12.50 1,228,053.46
11/21/03 Alfred S. Chuang 100,000 12.41 -12.48 1,243,144.00
02/24/04 Alfred S. Chuang 99,900 13.30 - 13.52 1,339,885.77
02/25/04 Alfred S. Chuang j 100,000 13.48-13.67 1,360,491.53
CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C04-2275-Si
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11 Range of Prices Number of at which Proceeds From
Date Name of Defendant Shares Sold Shares Sold Shares Sold
02/26/04 Alfred S. Chuang 100,000 13.37 - 13.85 1,356,191.64
02/27/04 Alfred S. Chuang 100,000 13.78 - 14.27 1,395,085.27
TOTAL 799,000 10, 361,490.34
22, Individual Defendant William M. Klein ("Klein"), served as the Company's Chief
Financial Officer at all relevant times. During the Class Period, as more fully outlined in the table
below and exhibited in his Form 4(s) filed with the SEC, Defendant Klein sold 475,000 shares of
BEA stock for proceeds of over $6.36 million. After his sales during the Class Period, Defendant
Klein owned a mere 2,370 BEA shares. He has not sold any shares since the conclusion of the Class
Period. During the 10 months prior to the start of the Class Period, Klein sold only 1,600 shares for
proceeds of $16,880.00.
Range of Prices Proceeds From Number of at which Shares Sold
Date Name of Defendant Shares Sold Shares Sold
11/24/03 William M. Klein 19,133 12.75 - 12.78 244,002.60
12/01/03 William M. Klein 100,000 12.75 - 12.81 1,276,361.45
12/02/03 William M. Klein 5,867 12.75 - 12.78 74,814.75
02/24/04 William M. Klein 100,000 13.50 - 13.54 1,350,421,24
02/25/04 William M. Klein 100,000 13.48 - 13.67 1,360,609.28
02/26/04 William M. Klein 100,000 13.35 13.85 1,355,644.99
02/27/04 William M. Klein 50,000 13.78 - 14.27 697,449.86
TOTAL 475,000 61359,304.15
23. Individual Defendant Charles L. 111, III ("Ill"), served as the Company's Executive
Vice President of Worldwide Sales at all relevant times. During the Class Period, as more fully
outlined in the table below and exhibited in his Form 4(s) flied with the SEC, Defendant Ill sold
100,000 shares for a proceeds of $1.32 million. Defendant Ill has not sold any shares since the
conclusion of the Class Period. During the 10 months prior to the start of the Class Period,
Defendant Ill did not sell any shares of BEA Systems common stock.
CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-04-2275-S
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1 Number of Price of Proceeds From
Date Name of Defendant Shares Sold Shares Sold Shares Sold
01/06/04 Charles L. Ill, III 33,333 13.08 435,995.64
01/07/04 Charles L. Ill, III 33,333 13.12 437,328.96
01/08/04 Charles L. Ill, III 33,334 13.31 443,675.54
TOTAL 100,000 1,317,000.10
24. Individual Defendant Thomas M. Ashburn ("Ashburn"), served as the Company's
Executive Vice President at all relevant times. During the Class Period, as more fully outlined in
the table below and exhibited in his Form 4(s) filed with the SEC, Defendant Ashburn sold 100,000
shares for a profit of $1.34 million. In the 12 months following the close of the Class Period,
Defendant Ashburn has not sold any shares of BEA Systems stock.
Number of T Price of Proceeds From
Date Name of Defendant Shares Sold jShares Sold Shares Sold
02/26/04 Thomas Ashburn 100,000 13.35 1,335,000.00
TOTAL 100,000 1,335,000.00
25. During the Class Period, each of the Individual Defendants, as senior executive
officers and/or directors of BEA Systems, were privy to nonpublic information concerning its
business, finances, products, markets and present and future business prospects via access to internal
corporate documents, conversations with other corporate officers and employees, attendance at
management and Board of Directors meetings and committees thereof and via reports and other
information provided to them in connection therewith. In fact, many of the sales of their personal
holdings took place after they or their colleagues or representatives attended a sales forecast
presentation which expressly indicated that forecasts that had been provided or were being provided,
were inaccurate. Because of their possession of such information, the Individual Defendants knew
or recklessly disregarded the fact that the adverse facts specified herein had not been disclosed to,
and were being concealed from, the investing public.
26. Each of the Individual Defendants is liable as a direct participant with respect to the
wrongs complained of herein. In addition, the Individual Defendants, by reason of their status as
senior executive officers and directors were each a "controlling person" within the meaning of I CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C04-22 75-SI
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1 Section 20 of the Exchange Act and had the power and influence to cause the Company to engage
2 in the unlawful conduct complained of herein. Because of their position of control, the Individual
3 Defendants were able to and did, directly or indirectly, control the conduct of BEA Systems'
4 business.
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27. The Individual Defendants, because of their positions with the Company, were
6 provided with copies of the Company's reports and press releases alleged herein to be misleading,
7 prior to or shortly after their issuance and had the ability and opportunity to prevent their issuance
8 or cause them to be corrected. Thus, the Individual Defendants had the opportunity to commit the
9 fraudulent acts alleged herein.
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28. The Individual Defendants are liable, jointly and severally, as direct participants in
11 and co-conspirators of, the wrongs complained of herein.
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CLASS ACTION ALLEGATIONS
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29, Lead Plaintiff brings this action as a class action pursuant to Federal Rules of Civil
14 Procedure 23(a) and (b)(3) on behalf of itself and a class (the "Class"), consisting of all those who
15 purchased the common stock of BEA Systems between November 13, 2003 and May 13, 2004
16 inclusive (the "Class Period"), and who were damaged thereby. Excluded from the Class are
17 Defendants, the officers and directors of the Company, members of their immediate families and
18 their legal representatives, heirs, successors or assigns and any entity in which Defendants have or
19 had a controlling interest. An action on behalf of a subclass (the "Subclass") is also brought by the
20 Representative Plaintiff Arthur J. Donisi ("Donisi), on behalf of any Class member who purchased
21 their BEA Systems stock on November 11-21, 2003, November 24, 2003; January 6-8, 2004; and
22 February 24-27, 2004 (the "Subclass Period"), thereby trading contemporaneously with the
23 Individual Defendants while Defendants were in possession of material adverse non-public
24 information concerning BEA Systems, and were damaged thereby.
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30. The members of the Class and Subclass are so numerous that joinder of all members
26 is impracticable. Throughout the Class Period, BEA Systems common stock was actively traded
27 on the NASDAQ National Market ("NASDAQ"). BEA Systems has approximately 407 million
28 shares actively trading on the NASDAQ. While the exact number of Class and Subclass members
CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-04-2275-Sl
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1 is unknown to Lead Plaintiff and Representative Plaintiff at this time, and can only be ascertained
2 through appropriate discovery, Plaintiffs believe that there are hundreds or thousands of members
3 in the proposed Class and Subclass.
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31. Both Lead Plaintiff and Representative Plaintiff claims are typical of the claims of
5 the members of the Class and Subclass respectively, because Plaintiffs and all of the Class and
6 Subclass members sustained damages arising out of Defendants! wrongful conduct complained of
7 herein.
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32. Lead Plaintiff and Representative Plaintiff will fairly and adequately protect the
9 interests of the Class and Subclass members and have retained counsel who are experienced and
10 competent in class actions and securities litigation.
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33. A class action is superior to all other available methods for the fair and efficient
12 adjudication of this controversy, since joinder of all members is impracticable. Furthermore, as the
13 damages suffered by individual members of the Class and Subclass may be relatively small, the
14 expense and burden of individual litigation make it impossible for the members of the Class and
15 Subclass to individually redress the wrongs done to them. There will be no difficulty in the
16 management of this action as a class action.
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34. Questions of law and fact common to the members of the entire Class predominate
18 over any questions that may affect only individual members, in that Defendants have acted on
19 grounds generally applicable to the entire Class. Among the questions of law and fact common to
20 the entire Class are:
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(a) Whether the federal securities laws were violated by Defendants' acts as alleged
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herein;
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(b) Whether the Company's publicly disseminated press releases and statements during
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the entire Class Period omitted and/or misrepresented material facts;
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(c) Whether Defendants breached any duty to convey material facts or to correct
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material facts previously disseminated;
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(d) Whether Defendants participated in and pursued the fraudulent scheme or course of
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business complained of;
CONSOLIDATED AMENDED CLASS ACTION: COMPLAINT Case No. CM42275-SI
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(e) Whether the Defendants acted willfully, with knowledge or recklessly, in omitting
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and/or misrepresenting material facts;
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(t)
Whether the market price of BEA Systems' common stock during the Class Period
4 and Subclass Period was artificially inflated due to material non-disclosures and/or
5 misrepresentations complained of herein; and
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(g)
Whether the members of the Class and Subclass have sustained damages and, if so,
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what is the appropriate measure of damages.
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FRAUD-ON-THE-MARKET DOCTRINE
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35. Plaintiffs will rely, in part, upon the presumption of reliance established by the fraud-
10 on-the-market doctrine, in that at all relevant times, the market for BEA Systems' common stock was
11 an efficient market for the following reasons, among others:
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(a) BEA Systems' common stock met the requirements for listing, and was listed and
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actively traded on the NASDAQ, a highly efficient and automated market;
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(b) As a regulated issuer, BEA Systems filed periodic public reports with the SEC and
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the NASDAQ;
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(c) BEA Systems regularly communicated with public investors via established market
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communication mechanisms, including the regular disseminations of press releases
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on the national circuits of major news wire services and through other wide-ranging
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public disclosures, such as communications with the financial press and other similar
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reporting services. Each of these releases was publicly available and entered into the
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marketplace; and
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BEA Systems was followed by securities analysts employed by major brokerage
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firms who wrote reports which were distributed to the sales force and certain
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customers of their respective brokerage firms. Each of these reports were publicly
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available and entered the public marketplace.
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36. As a result of the foregoing, the market for BEA Systems' common stock promptly
27 digested current information regarding BEA Systems from all publicly available sources and
28 reflected such information in BEA Systems' common stock pricing. Under these circumstances,
CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-04-2275-SI
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I all persons who purchased or otherwise acquired BEA Systems common stock during the Class
2 1 Period suffered similar injury as the stock was trading at artificially inflated prices and a
3 presumption of reliance applies.
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SUBSTANTIVE ALLEGATIONS Materially False and Misleading
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Statements Made During the Class Period
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37. Amid increasingly fierce competition from IBM and Oracle in BEA's maturing
7 application server market, in November 2001, BEA Systems embarked on a "bet the farm" new
8 product strategy directed at expanding its core product, WebLogic, into a platform that also includes
9 integration, development tools and portals, to provide integration to enterprise applications. The
10 new product, ultimately called "WebLogic Platform 8.1," shipped in July 2003, after a twenty month
11 research and development effort. During that effort, BEA Systems increased its research and
12 development expenditures by 45%. This commitment came at a time when other information
13 technology ("IT") companies were scaling back in the face of overall weak customer demand
14 following the September 11, 2001 attacks on the World Trade Towers.
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38. Prior to the start of the Class Period, Defendants assured the marketplace that BEA' s
16 sales strategy was in place, and that the sales force was ready and able to successfully sell 8.1. In
17 this regard, at an earnings conference call held on August 14, 2003, Chuang claimed,". . . we have
18 prepared the sales force and prim[ed] the market."
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39. However, contrary to Defendants' representations and predictions, by the beginning
20 of the Class Period, the sales force was far from prepared for a seamless transition to 8.1 and
21 customer acceptance of the new product as reflected in licensing revenues .- was stagnating.
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40. BEA Systems' 2004 fiscal year runs from February 1, 2003 through and including
23 January 31, 2004. Fiscal year 2005 began on February 1, 2004,
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41. The Class Period begins on November 13, 2003, when Defendants issued a press
25 release highlighting the Company's performance for the period ending on October 31, 2003
26 ("3Q04")
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42. In the release, BEA Systems reported total revenues of $252.1 million, up 8% from
28 $234.0 million in 3Q03. For 3Q04, BEA reported license revenues of $128.2 million, up 2% from
CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-04-2275-SI
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$126.1 million in the prior year's third quarter BEA also reported that it had generated cash flow
2 from operations of $60.0 million, up from $45.3 million in the prior year's third quarter. Plaintiffs
3 are not alleging that any of these statements were historically inaccurate, but rather, that when they
4 are combined with the statements which accompanied the financial results in the press release and
5 in the conference call, as described below, the historical figures were not indicative of what future
6 results could be expected and therefore violated the federal securities laws as Defendants did not
7 articulate that these results should not be expected in the future.
43. In the November 13, 2003 press release, Defendant Chuang commented:
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BEA WebLogic Platform 8.1 is gaining momentum. It represents our most significant product transition since we introduced WebLogic
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application server five years ago. We believe interest from customers and partners is growing, and we expect it to be a
11 similar hit, too. (Emphasis added.)
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44. In the Company's earnings conference call with analysts on 3Q04 results, conducted
13 on November 13, 2003, Defendant Chuang commented on the acceptance of 8.1 as follows:
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The transition to WebLogic 8.1 is the largest we have seen since we introduced WebLogic Server in 1998. And the early returns are
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encouraging that the 8.1 platform is going to be a hit too. We are also seeing improving results in services, with consulting, education,
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and customer support all showing growth around 8.1. Based on our experience with the transition to WebLogic Server, we believe
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these are leading indicators of future license revenues. (Emphases added.)
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45. During the November 13, 2003 conference call with analysts, Defendant Chuang was 19
specifically questioned by analysts as to the readiness of the sales force in marketing the new 8.1: 20
Q. (Tim Klasell, Thomas Weisel) First question is on the sales force. 21
How effective is your existing sales force at closing 8.1 deals? Do [sic] think you are going to have to do more training, or do you think
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you're going to have to do change outs of your sales force? And as part of that, can you give me the current headcount?
23 A. (Alfred Chuang) We are in the low 500 direct quota bearing reps,
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which is the same that we had last quarter, We're beginning to add to our sales headcount in specific geographies this quarter. And we
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have done a very, very thorough job in training our sales force on 8.1. Specifically, we have been training them to sell the platform,
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and also going far more into the value sale for a while. (Emphases added.)
27 The sales force, I think, undeniably loves the platform sales message,
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because it is clear that nobody has what we have. So it makes their
CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No, C-04-2275-SI
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sales cycle and the sales process much easier. . . . Our sales force today has changed a lot over the last two years. Our sales force today
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has to sell a lot of business value. Our typical contact my typical contacts are CEOs of companies. But we are talking a lot more
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about how infrastructure can enable business very differently. And I think it is working. (Emphasis added.)
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46. However, Defendants' statements highlighted above in paragraphs 43 through 45
6 above were materially false and misleading when made as Defendants were already aware that
7 licensing revenues - a key indicator of new customer growth - was being internally identified as a
8 problem facing the Company. Furthermore, Defendants were advised by key personnel that in
9 contrast to theirpublic statements (i) 8.1 was not "gaining momentum"; (ii) 8.1 was not experiencing
10 wide customer acceptance; and (iii) the sales force was having tremendous difficulty closing deals
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on 8.1.
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47. In this regard, the falsity of these statements was confirmed by former employees of
13 BEA. According to a former Vice President of Sales employed by J3EA from December 2000
14 through May 2004 ("CW1"), the WebLogic 8.1 product was too advanced and therefore, "beyond"
15 what customers were looking for. In addition, because 8.1 was a "proprietary solution," and
16 therefore, a major purchase that could affect their entire systems, customers were taking significantly
17 longer to reach final buy decisions and particularly so, with many of the larger accounts. In reaction
18 to these negative trends, CWI has confirmed that Defendant Chuang consistently blamed the sales
19 force for the longer selling cycle, when, in fact, it was a product problem. CW1 further stated that
20 because the main customers of WebLogic 8.1 were Fortune 500 companies and other big customers,
21 large transaction opportunities were drying up and it was obvious to everyone involved that
22 licensing revenue was declining.
23
48. Similarly, a former senior manager of public relations employed by BEA from
24 January 2000 through October 2003 ("CW2"), reported that licensing revenue had been going down
25 for over a year before CW2 left the Company. In fact, the decline of licensing revenue was a
26 specific topic of conversation during at least three regular quarterly meetings headed by Defendants
27 Chuang and Klein, which were attended by CW2 before the Class Period began. Consequently, at
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CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-04-2275-SI
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I the time the statements set forth above in paragraphs 43 through 45 were made, Defendants knew
2 that any potential pools of new customers were drying up.
3
49. On December 9, 2003, BEA conducted its Analyst Day during which Defendant
4 Klein informed analysts that the Company was still targeting revenue of $260 million to $270
5 million in the fourth quarter. According to attendee analyst Think Equity Partners, as reported on
6 December 10, 2003, BEA management "also commented that it currently had enough deals in the
7 pipeline to meet the guidance for the current quarter and believe that sales execution is improving."
8 Further, Think Equity Partners reported that "management believes that it can maintain current
9 license revenue mix of about 51-53% of total revenue..."
10
50. Defendants statements to analysts at the Company's Analyst Day as reported above,
11 were materially false and misleading, as by this time, Defendants were well aware that falling
12 license revenue was a significant problem facing BEA Systems, and the license revenue projections
13 made were undeliverable.
14
51. On February 19, 2004, the Company issued a press release reporting financial results
15 for its 2004 year end and for its fourth quarter ended January 31, 2004. BEA reported total revenues
16 for the fourth quarter of $278.1 million, which were up 10% from $252.1 million from the prior
17 quarter. For the 2004 fourth quarter, BEA reported license revenues of$ 143.1 million, up 12% from
18 $128.2 million in the prior quarter.
19
52. While it would appear that an increase in license revenue would be an extremely
20 positive development for the Company, it was not until almost 2 entire months had passed that the
21 Company finally disclosed in its Form 10-K filed on April 15, 2004, that the increase in licensing
22 revenue was not the drumbeat of new customers, but rather, was attributable to a single transaction
23 with a license value of greater than $10 million.
24
53. In the February 19t1 press release, commenting on the fourth quarter and fiscal 2004
25 year end results for the Company, Defendant Chuang further stated:
26
We are pleased to reach $1 billion in revenue for a fiscal year, and to return to double digit revenue growth. The R&D investment we
27 made in WebLogic Platform 8.1 is paying off. We enter QI with
good momentum, and we intend to focus on further expansion of
28 our sales capacity and distribution channel," said Alfred Chuang,
CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-04-2275-SI
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BEA's founder, chairman and CEO. "BEA WebLogic Platform 8.1 continues to gain momentum. Independent research studies and customer tests show that WebLogic 8.1 can deliver revolutionary productivity gains that translate into faster time to value on mission-critical software projects like business integration and enterprise portals. Customers are seeing those gains come to life as they work through their initial deployments, and are seeing significant reuse benefits in their follow-on projections. Our approach of converging application development and integration, and simplifying application infrastructure, gives customers a more effective way to build, integrate and deploy enterprise applications and Webservice. Customers are achieving increased productivity and return on investment. We believe the platform approach will help revolutionize enterprise IT projects." (Emphases added.)
54. At the time the February 19th press release was issued, the Defendants each knew
that BEA and Chuang had made false and misleading statements in the press release and during the
earnings conference call with analysts, including that: (i) "WebLogic Platform 8.1 is paying off;"
(ii) the Company was entering "QI with good momentum;" (iii) the Company intended "to focus
on further expansion of [its] sales capacity and distribution channel;"and (iv) "BEA WebLogic
Platform 8.1 continues to gain momentum."
55. According to CW1, senior management of BEA Systems knew that WebLogic
Platform 8.1 sales were already lagging by this time because this material adverse non-public
information was the central focus of a forecast he had personally prepared and presented to them on
February 1, 2004, The forecast showed that sales were "significantly short of plan." CW1 indicated
that it was not unusual to forecast somewhat short at the beginning of a quarter, however, he had
made clear to management that this was a very significant shortage. in fact, Defendant Chuang was
so concerned about the significant shortage in 8.1 sales, that he began blaming the shortfall on the
sales force.
56. During BEA Systems' 4Q04 Earnings Conference Call, held on February 19, 2004,
Defendant Chuang stated that "I think we've seen better than we expected momentum so far. 8.1
is very hot. . . [r]ight now, it all looks good."
57. This statement, which specifically references purported success with the Company's
most critical product, thereby rendering it material, was false and misleading when made in light of
CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-042275SI
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the non-public information of which Defendant Chuang was personally aware of, having attended
2 the sales forecast meeting on February 1, 2004, as set forth above in paragraph 55.
3
58. Moreover, the Company, through Defendant Klein, and in the presence of Defendant
4 Chang, continued to specifically mislead the investing public regarding the Company's falling
licensing revenues as exhibited by the following exchange which took place on the conference call:
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Q. (Jason Maynard, Merrill Lynch) On the deferred revenue $42m increase, was any of that related to deferred licence revenue? Was
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there a piece of that in there or was that all maintenance?
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A. (Bill Klein) Most of it was maintenance. We did have some increases in other areas but the lion's share of that was maintenance.
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10 Q. (Sarah Friar, Goldman Sachs) Then just very briefly, on guidance,
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which was terrific overall, $260m-270m. I look at the license revenue guidance, it actually looks at the mid point that you are
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saying license as a percentage of total revenue will come down a little bit, to more around 49%. I think it's been running at 50% plus. Why
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do you feel that little bit more reticence on the license revenue side?
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A. (Bill Klein) It has to do more with Qi seasonality. I think if you look back at Qi in any of our fiscal years, you'll see that mix
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shift a little bit and then over the course of the year the license mix tends to peak in Q4.
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17 Q. (Robert Stimson, Banc of America Securities) Just a little bit of
is
follow up. Maybe you can help me a little bit. []I think the deferred revenue last year was up about 20%. [] this year it's about 17%.
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Should the revenues that you are seeing in the guidance as we head into FY05, should that basically be about the same percentage come
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off the balance sheet that we saw last year?
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A. (Bill Klein) Looking out to the end of FY05?
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Q. (Robert Stimson, Banc of America Securities) Yes.
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A. (Bill Klein) That would be a reasonable estimate I think. We don't provide specific guidance on that but that wouldn't be
24
unreasonable to look at it that way. (Emphasis added.)
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59. The statement contained in paragraph 58 above is materially false and misleading as
26 by this time, Defendant Klein and Chuang were well aware that licensing revenues were down due
27 to a failed sales organization and slow customer transition to 8. 1, and not "Qiseasonality."
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CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C..042275S1
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60. In addition, during the same conference call, Defendant Chuang directly misled
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analysts concerning the state of the Company's sales force and distribution strategy:
(Alfred Chuang) And that brings me to our distribution strategy. As I said a little bit earlier, we entered Qi with good momentum. We're pleased with the level of customer activities in Q4, and with what we see for QI. As we announced in December, the primary focus of our direct distribution strategy is to add to our capacity. We're committed to adding 100 new quota-bearing sales reps. We're actively recruiting, and expect hiring to continue over the course of the next couple quarters. (Emphasis added.)
Q. (Sarah Friar, Goldman Sachs) Good quarter, guys. A quick question, just first on the sales force. Obviously, at the analyst day, you took us through in great depth the sales force strategy. And, as you said, you have added heads this quarter. Could you kind of maybe just give us a flavor of where you think you are in that? So of those 100 heads, how many do you feel you have in place today? And then, as part of the guidance, are you assuming that those heads will be up to speed with quotas in Qi? Or is that going to take a while?
A. (Alfred Chuang) Yes. I think that there is, as we have talked about the analyst kickoff. So those 100 heads will be hired over a three to four quarter kind of period. Q4 was not the greatest hiring quarter for us, for sales heads. We were just flat to slightly up. It mostly had a lot to do with everyone is on the accelerator, so it's not the priorities typically for the sales force to be spending all its time hiring sales force. So they are focused, focused, heads down, in the closing of deals. And you saw what happened here; we had a lot of deals. So people were very busy just trying to close business.
So are we pushing them very hard? We expect that we're going to go up in sales headcount in QI. There will be some ramp time. We do put people on draw (ph); it depends on what type experience they have, and that kind of stuff. It looks like - right now we're one month into the quarter we will be on track for hiring for Qi.
Q. (Sarah Friar, Goldman Sachs) And as you do that, you talked about a solution sell rather than a point product sell. Have you now got most of your sales force able to sell the entire platform, or do you still have specialized sales forces for integration and so on?
A. (Alfred Chuang) So here was (ph) a very interesting thing. I think the transition from selling points onto (ph) the selling platform has been enormously successful. You can find a sales rep out in the middle of China somewhere and ask the guy, what do you sell? And he'll say, well, Jam selling BEA Platform. But what I said - selling is one thing. Taking an order from a customer on a point product - we have no problem with that, we do that all day long. We will take orders for anything that they want to divide (ph). But the story and the selling methodology is around selling the whole platform itself, and our ultimate goal is for the customer to adopt the
CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-04-2275-Sl
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whole platform, whether we sell one product, two products or they decide to sell the whole platform itself.
So that doesn't really matter to us that much. Our sales force is well-trained. We just weeks ago, in going into our biggest sales training event ever, and we do expect to refresh them all with updates and the additions we have put on the platform itself. I think the momentum is great.
Q. (David Rudow, Piper Jaffray) Nice job on the quarter. Any changes- major changes in sales force in North America, or do you expect to make any major changes there in Q1?
A. (Alfred Chuang) We do not expect to make any changes to our sales force in the Americas in QI. We have added a thing in mid-course of quarter (ph) called the general territory, which really is used for attacking the SME marketplace, accounts that we normally don't call on, the smaller deals, project starters and also focus on a couple of the resellers. And it's actually run by a guy that has been with the Company for a very long time- he's doing a very good job. It's up and running. We have about 75 people in it. So that's the only minor trend that we have done, but that's done actually a month ago. So we don't anticipate any changes, really, in the Americas at this point in time. (Emphases added.)
61. In stark contrast to his public statements, by this time, Defendants Chuang and Klein,
as reported by CW1 had been advised of falling licensing revenues, slow customer transition to 8.1
and the failed sales organization, by virtue of the sales forecast presented by CWI on February 1,
2004. Defendants' materially false and misleading statements concerning the "minor trend" in the
organization of the Americas' sales force, which was allegedly "up and running" and "done actually
a month ago" was diametrically opposed to the bleak sales forecast and product transition issues
identified by CWI for Defendants.
62. During the week following the Company's February 19, 2004 release of its 4Q04
results, Defendants collectively sold over $11.27 million worth of BEA stock. Specifically, on
February 27, 2004, Defendant Chuang exercised options to buy 77,200 Company shares for $4.33
per share. Between February 24 to February 27, 2004, Defendant Chuang then sold 399,900 shares
for prices ranging from $13.30 to $14.27 per share, for a total of $5.45 million in proceeds. From
February 24 to February 27, 2004, Defendant Klein exercised options to buy 300,504 Company
shares for prices ranging from $2.75 to $3.78 per share, and sold 350,000 shares for prices ranging
from $13.35 to $14.27, for a total of $4.76 million in proceeds. On February 26, 2004, Defendant
CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C042275SI
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1 Ashburn exercised 100,000 Company shares for $2.78 per share and sold each of those shares for
2 $13.35, for a net gain of $1.06 million. In addition, on February 27, 2004, BEA co-founder and
3 director William T. Coleman exercised options to buy 2,460 Company shares for $6.43 per share.
4 Mr. Coleman then sold 150,000 BEA shares for $14 per share, for a total of $2.1 million in proceeds.
5
63. Defendants Chuang, Klein and Ashburn and director Coleman sold their $13.37
6 million of BEA stock within days of the February 19, 2004, 4Q04 earnings announcement to ensure
7 they could reap the profits of their false and misleading disseminations before the Company's true
8 state of affairs would come to light. After the sales, Defendant Klein owned a mere 2,370 shares
9 and Defendant Ashburn owned no shares.
10
64. On April 13, 2004, BEA issued a press release over PR Newswire entitled "BEA to
11 Launch WebLogic Pro Magazine at eWorid 2004." In that press release, I3EA continued to mislead
12 shareholders regarding the demand for BEA WebLogic Platform 8.1. According the Company,
13 "[sJince the release of BEA WebLogic Platform 8. 1, there has been a swell of enthusiasm from the
14 developer community around [BEA's] integrated application platform suite approach to
15 development and deployment of applications[. ]"(Emphasis added.)
16
65. Defendants' contention of this "swell of enthusiasm" misled shareholders into
17 believing there was more demand for WebLogic Platform 8.1 than actually existed, a fact which
18 Defendants were well aware of in light of the CWI's February 1, 2004 sales forecast presentation
19 and what had actually developed in the two months following the report.
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THE TRUTH BEGINS TO EMERGE
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66. On May 13, 2004, after the close of the market, the Company issued a press release
22 reporting on first quarter results. Included therein, BEA announced that license revenues had come
23 in at $120.2 million for the year, well short of the $ 127-132 million guidance they had provided as
24 recently as February 19, 2004.
25
67. In the Company's earnings conference call conducted on May 13, 2004, Defendant
26 Chuang offered the following comments concerning the disappointing revenues reported:
27 . . Our Americas performance was below expectation, and was impacted by several factors. This includes seasonality, product
28
CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-04-2275-SJ
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transition and some coverage model changes we have made in the field organization.
2 I will give you some examples. During the quarter, we created a
3 general accounts region (ph) to focus on medium-sized businesses
and coordinate with the Americas VAR channel that we're 4
building. We reemphasized the inside sales organization and consolidated the organization into a central region. In some
5 cases, those changes meant reassigning coverage of some of our
existing accounts and prospects. The transition into the new
6 coverage model and transition of customer relationships have
taken longer than we expected. All of this resulted in some near-
7
term disruption.
The coverage model changes in the general accounts and inside sales organization were all completed in the middle of Q1, and we don't
9 plan on any more structural changes at this point in time. The inside
sales organization is stabilized, and we are starting to see results of
10
both the general accounts and also the inside sales organization. For example, the general accounts group is now working with 12 new
11
VARs singing up today in the Americas. (Emphasis added.)
12
68. Thus, contrary to his report to analysts on February 19, 2004 and representations
13 throughout the Class Period as to the readiness and stability of the sales force, Defendant Chuang
14 was now acknowledging that the Company was intimately familiar with the difficulty the sales force
15 was having with the new product as substantive changes had been made in the North American sales
16 force at the same time as positive statements were being made to the investing public regarding the
17 same topic.
18
69. This disclosure shocked the market and caused the price of the BEA Systems shares
19 to drop a staggering 22.54% or $2.43 to close at $8.35 per share on extremely heavy trading volume
20 of 73.5 million shares, which was more than 9.67 times the average trading volume during the Class
21 Period.
22
ADDITIONAL SCIENTER ALLEGATIONS
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70. As alleged herein, in addition to the insider sales by the Individual Defendants
24 described above at J13, 19-24, 62 and 63, Defendants acted with scienter in that they knew or
25 recklessly disregarded that: (i) the public documents and statements issued or disseminated by or
26 in the name of the Company were materially false and misleading when made; (ii) such statements
27 or documents would be issued or disseminated to the investing public; and (iii) knowingly and
28 substantially participated or acquiesced in the issuance or dissemination of such statements or
CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-04-2275-Si
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1 documents as primary violators of the federal securities laws. These Defendants knew or recklessly
2 disregarded that the WebLogic Platform 8.1 product was not receiving customer acceptance as stated
3 by Defendants and that their statements as to a high expectation of licensing revenue growth
4 resulting from 8.1's launch was contradicted by internal reports and therefore lacked any reasonable
5 basis for belief.
6
71. In addition, as set forth elsewhere herein in detail, Defendants had direct knowledge
7 of the Company's falling licensing revenues which were the subject of no less than three quarterly
8 meetings conducted prior to October 2003, as reported by CW2, and thereafter confirmed by CW1.
9 Moreover, Defendants had direct knowledge that the sales and licensing revenues were falling
10 significantly short of forecast as presented by CW 1 on February 1, 2004.
ii
72. Defendants knew and/or recklessly disregarded the falsity and misleading nature of
12 the information which they caused to be disseminated to the investing public. The ongoing
13 fraudulent scheme described in this complaint could not have been perpetrated over a substantial
14 period of time, as has occurred, without the knowledge and complicity of the personnel at the
15 highest level of the Company, including the Individual Defendants.
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STATUTORY SAFE HARBOR
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73. The federal statutory safe harbor provided for forward-looking statements under
18 certain circumstances does not apply to any of the allegedly false statements pleaded in this
19 Complaint, as the Defendants possessed direct knowledge of their falsity at the time they were made.
20 Defendants are liable for the forward-looking statements pleaded because, at the time each of those
21 forward-looking statements was made, the speaker knew the forward-looking statement was false
22 and the forward-looking statement was authorized and/or approved by an executive officer of BEA
23 Systems who knew that those statements were false when made.
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CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-04-2275-SI
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1
FIRST CLAIM
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Violation Of Section 10(b) Of The Exchange Act And Rule lOb-S Promulgated Thereunder Against All Defendants
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74, Lead Plaintiff repeats and reiterates the allegations set forth above as though fully
5 set forth herein. This claim is brought under Section 10(b) of the Exchange Act and Rule I Ob-5
6 promulgated thereunder by the SEC and asserted against all Defendants.
7
75. During the Class Period, BEA Systems and the Individual Defendants disseminated
8 or approved the false statements specified above, which they knew or deliberately disregarded were
9 misleading in that they contained misrepresentations and failed to disclose material facts necessary
10 in order to make the statements made, in light of the circumstances under which they were made,
11 not misleading.
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76. BEA Systems and the Individual Defendants:
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a. Employed devices, schemes, and artifices to defraud;
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b. Made untrue statements of material facts or omitted to state material facts
15 necessary in order to make the statements made, in light of the circumstances under which they were
16 made, not misleading; or
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C, Engaged in acts, practices, and a course of business that operated as a fraud
18 or deceit upon plaintiffs and others similarly situated in connection with their purchases of BEA
19 Systems common shares during the Class Period.
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77. Lead Plaintiff and the Class have suffered damages in that, in reliance on the integrity
21 of the market, they paid artificially inflated prices for BEA Systems common shares. Lead plaintiff
22 and the Class would not have purchased BEA Systems common stock at the prices they paid, or at
23 all, if they had been aware that the market prices had been artificially and falsely inflated by
24 Defendants misleading statements.
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78. When the truth came Out regarding the Company's falling licensing revenues, slow
26 customer transition to 8.1 and the failed sales organization, BEA Systems' stock dropped
27 precipitously, thereby causing damages to Lead Plaintiff and the Class.
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CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No, C-042275SI
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79. As a direct and proximate result of Defendants' wrongful conduct, Lead Plaintiff and
2 the other members of the Class suffered damages in connection with their purchases of BEA
3 :1 Systems common stock during the Class Period.
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SECOND CLAIM
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Violation Of Section 20(a) Of The Exchange Act Against BEA Systems and the Individual Defendants
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80. Lead Plaintiff repeats and reiterates the allegations as set forth above as if set forth
8 fully herein. This claim is asserted against the Individual Defendants.
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81. The Individual Defendants acted as controlling persons of BEA Systems within the
10 meaning of20(a) of the 1934 Act. By reason of their positions as officers and/or directors of BEA
111 Systems, the Individual Defendants had the power and authority to cause BEA Systems to engage
12 in the wrongful conduct complained of herein, specifically, in that the Individual Defendants caused
13 BEA Systems to disseminate materially false and misleading statements concerning the true state
14 of the Company's falling licensing revenues, slow customer transition to 8.1 and failed sales
15 organization, while at the same time possessing actual knowledge of the statements' falsity by virtue
16 of directly contradictory reports and forecasts. BEA Systems controlled each of the Individual
17 Defendants and all of its employees. By reason of such conduct, the Individual Defendants and BEA
18 Systems are liable pursuant to 20(a) of the 1934 Act.
19
THIRD CLAIM
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For Violations of 20A of the Exchange Act Against the Individual Defendants
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82. Proposed Subclass Representative Donisi repeats and realleges each and every
23 allegation contained in the foregoing paragraphs as if fully set forth herein.
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83. This Claim is brought by Donisi against the Individual Defendants on behalf of a
25 subclass of persons who purchased BEA Systems' common stock contemporaneously with the sales
26 of BEA Systems' stock by the Individual Defendants.
27
84. By virtue of the Individual Defendants' positions as senior insiders and members
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CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-04-2275-Si
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I of BEA Systems' management, the Individual Defendants were in knowing possession of material,
2 nonpublic information about BEA Systems at the time of their collective sales of more than $19
3 million of BEA Systems' common stock.
4
85. By virtue of their participation in the scheme to defraud investors described herein,
5 the Individual Defendants, through their sales of stock while in knowing possession of material, non-
6 public information about the adverse information detailed herein, violated the Exchange Act and
7 applicable rules and regulations thereunder, as set forth in the First and Second Claims.
8
86. Proposed Class Representative Donisi and all other members of the Subclass who
9 purchased shares of BEA Systems' stock contemporaneously with the sales of BEA Systems'
10 common stock by the Individual Defendants named in this Claim: (1) have suffered substantial
11 damages as a result of the violations of 10(b) and 20(a) and Rules lob-S and lObS-I herein
12 described; and (2) would not have purchased BEA Systems' stock at the prices they paid, or at all,
13 if they had been aware of the material, non-public information that the Individual Defendants had
14 I obtained.
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87. This action is commenced within five years of the Individual Defendants' November
16 2003 -February 2004 open-market sales of BEA Systems common shares.
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PRAYER FOR RELIEF
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WHEREFORE, Plaintiffs pray for judgment as follows:
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(1) Declaring this action to be a proper class action pursuant to FRCP 23;
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(2) Awarding Plaintiffs and the members of the entire Class damages, interest and costs;
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and
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(3) Awarding such equitable/injunctive or other relief as the Court may deem just and
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proper.
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CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-04-2275-SI
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DATED: October 18, 2004
GREEN & JIGARJIAN LLP
By 11ert S. Gen
235 Pine Street, 15 ' Floor San Francisco, CA 94104 Telephone: (415) 477-6700 Facsimile: (415) 477-6710
Liaison Counsel for Plaintiffs
Marc I. Wiliner Karen E. Reilly SCHIFFRIN & BARROWAY, LLP Three Bala Plaza East, Suite 400 Bala Cynwyd, PA 19004 Telephone: (610) 667-7706 Facsimile: (610) 667-7056
Lead Counsel for Plaintiffs
CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-04-2275Si
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JURY DEMAND
Plaintiffs demand a trial by jury.
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EXHIBIT A
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CERTIFICATION OF NAMED PLAINTIFF PURSUANT TO FEDERAL SECURITIES LAWS
14ui( 2o
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PROOF OF SERVICE
1, Leslie R. Cuesta, hereby declare as follows:
3
I am employed by Green & Jigarjian, A Limited Liability Partnership, 235 Pine Street,
4 15th Floor, San Francisco, California 94104. 1 am over the age of eighteen years and am not a
5 party to this action. On October 18, 2004, T served the within document(s):
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[CORRECTED] CONSOLIDATED AMENDED CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
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XX by placing the document(s) listed above for collection and mailing following the firm's ordinary business practice in a sealed envelope with postage thereon fully prepaid for
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deposit in the United States mail at San Francisco, California addressed as set forth below.
10 by personally delivering the document(s) listed above the person(s) at the address(es) set
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forth below.
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by causing personal delivery by of the document(s) listed above to the person(s) at the address(es) set forth below.
13 by depositing the document(s) listed above in a sealed envelope with delivery fees
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provided for a FedEx pick up box or office designated for overnight delivery, and addressed as set forth below.
15 by transmitting via facsimile the above listed document(s) to the fax number(s) set forth
16
below on this date.
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SEE ATTACHED SERVICE LIST
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In compliance with Civil L.R. 23-2, service is also made via electronic mail to a
19 Designated Internet Site that is identified by its physical and electronic addresses set forth below.
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Securities Class Action Clearinghouse Stanford University School of Law
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Crown Quadrangle Stanford, CA 94305-8612
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Email: [email protected]
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I declare under penalty of perjury under the laws of the State of California that the above
24 is true and correct, executed October 18, 2004, at San Francisco, California.
25
26 LesliRusta C)
27
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CONSOLIDATED AMENDED CLASS ACTION COMPLAINT Case No. C-04-2275-ST
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IN RE BEA SYSTEMS., INC. SECURITIES LITIGATION, No. C 04-2275 SI
SERVICE LIST
Patrick J. Coughlin John K. Grant LERACI! COUGHLIN STOIA GELLER
RUDMAN & ROBBINS LLP 100 Pine Street Suite 2600 San Francisco, CA 94111 Telephone: (415) 288-4545 Facsimile: (415) 288-4534
William S. Lerach Darren J. Robbins LERACH COUGHLIN STOIA GELLER
RUDMAN & ROBBINS LLP 401 B Street, Suite 1700 San Diego, CA 92 101 Telephone: (619) 231-1058 Facsimile: (619) 231-7423
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Marc S. Henzel LAW OFFICES OF MARC S. HENZEL 273 Montgomery Avenue, Suite 202 Bala Cynwyd, PA 19004 Telephone: (610) 660-8000 Facsimile: (610) 660-8080
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