The suit claims that some JDS executives inflated the value of the stock by misrepresenting the value and success of the company and its largest acquisitions. It also says company executives failed to report in a timely manner a steep downturn in sales and millions of dollars in write-offs related to obsolete inventory. The stock, which traded as high as $150 a share at its peak in July 2000, has been trading around $4 a share in recent weeks.
The Connecticut pension fund, which owned about $2 million in JDS stock as of March 30, has lost around $65 million on its investment, according to the complaint.
JDS Uniphase manufactures fiber optic components, which are sold to telecommunications and cable television system providers.
In March, the Connecticut pension fund got the OK from U.S. Magistrate Judge Elizabeth D. Laporte of the U.S. District Court for the Northern District of California, Oakland, to interview current and former employees about insider trading and other abuses, even though they had signed confidentiality agreements with JDS Uniphase.
"Dozens and dozens (of former employees) have responded to newspaper and radio ads the state placed in Hartford and Ottawa, where JDS has sizable operations. We've learned that the business was suffering a significant downturn by March 2000," said Barbara Hart, a partner at Goodkind Labaton Rudoff & Sucharow LLP, New York, which represents Connecticut in the case.
Ms. Hart said she's also learned from interviews with ex-JDS employees that "orders of the most lucrative products had stopped and inventory was building up. This was all contrary to the company's public reputation that it was doing well."