As data provider ChoicePoint Inc. filed its Form 8-K with the Securities and Exchange Commission and vowed to cooperate during an investigation of the circumstances surrounding recent executive stock sales Friday, a law firm filed a class action lawsuit on behalf of stockholders against the company in California.
The suit was filed March 4 by Schiffrin & Barroway LLP of Radnor, PA, in U.S. District Court for the Central District of California. A statement from the law firm said the suit was filed on behalf of purchasers of ChoicePoint common stock who bought it from April 22, 2004, through March 3, 2005.
The suit was prompted by the discovery that ChoicePoint executives sold shares worth $16.6 million after the company in October found a security breach that exposed consumer data to identity thieves, but before the problem was made public in late January.
Though ChoicePoint, Alpharetta, GA, defended CEO Derek Smith and president Douglas Curling in a Feb. 28 statement that said the plans were approved by the company's board of directors, the SEC has initiated an investigation.
In addition to Smith and Curling, the suit also names chief financial officer Steven Surbaugh. The lawsuit alleges that the executives inflated the stock price by making material misrepresentations to the market about ChoicePoint's financial condition.
At least two other class action lawsuits have been filed against ChoicePoint involving the data breach. Both represent consumers who had their data accessed by identity thieves.
ChoicePoint does not comment on litigation.
Kristen Bremner covers list news, insert media, privacy and fundraising for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters