Home » News » PwC, UBS sued for $100 mln over HPL scandal

PwC, UBS sued for $100 mln over HPL scandal

DALLAS, Oct 17 (Reuters) – Three HPL Technologies Inc. (HPLA) shareholders slapped accounting firm PricewaterhouseCoopers and UBS Warburg with a lawsuit Thursday in a bid to recover $100 million in damages, claiming the two firmsassisted the softwaremaker in overstating revenues, a lawyer for the plaintiffs said.

HPL Technologies in July ousted its chairman and Chief Executive David Lepejian after disclosing it was investigating improper booking of revenue in previous periods, sending its share price plunging.

Last month, federal authorities charged Lepejian with wire fraud for allegedly fabricating customer orders that represented most of the company's sales in the past fiscal year.

The lawsuit on behalf of Mark Harward, Brenda Stoner and Merrill Wertheimer was filed in Dallas state district court on Thursday morning and alleged that PricewaterhouseCoopers falsely certified HPL's financial statements. UBS Warburg, which underwrote HPL's IPO last was also named a defendant.

The three plaintiffs in February sold their company Covalar Technologies Group Inc. and its subsidiary TestChip Technologies to HPL in February for a total of $10 million in cash and about $33 million in HPL stock, which traded at about $14 before the accounting irregularities were disclosed. But the trio estimates it lost about $30 million since HPL's share price plunged following the accounting scandal, said Mark Werbner, lead counsel for the plaintiffs and a partner at law firm Sayles, Lidji and Werbner.

HPL shares closed at 8 cents a share on the Pink Sheets on Thursday.

A PricewaterhouseCoopers (PWC) spokesman said the firm does not comment on matters of litigation. UBS Warburg, a unit of Switzerland's UBS AG (UBSZn), was not immediately available to comment.

“We may later bring claims against HPL and potentially officers and directors, but for now, we want to focus on the responsibility of PricewaterhouseCoopers and UBS because they were an essential component to carrying out the fraud,” said Werbner. “It's inexcusable that an audit could have been done and not detected these irregularities.”

Leave a Reply

Stay Updated with Accountancy

Get the latest accounting news and articles sent directly to your inbox

This information will never be shared with any third party.