(CN) - A shareholder derivative accuses directors of California-based network technology company Juniper Networks of violating federal securities laws by concealing "harsh truths" from the investing public.
     Investor Lisa E. Coppola claims a slew of Juniper directors, including CEO Kevin Johnson, Chairman of the Board Scott Kriens, and Vice Chairman of the Board Pradeep Sindhu, breached their fiduciary duties to investors by issuing false and misleading statements from July 20, 2010 to July 26, 2011.
     The defendants touted the company's business performance, while allegedly withholding knowledge of dropping sales due to "technical issues and competition," the complaint states.
     According to the complaint, technical issues with Juniper's SRX products, recent employee turnover, a decrease in product prices due to competition, and new product launches that could not be added to Juniper's sales until 2012, were key information that Juniper directors failed to disclose. They instead reported increased revenues beginning in the second quarter of fiscal 2010 to the second quarter of fiscal 2011.
     The directors "lacked sufficient basis" for the positive outlook reported to the investing public, such as expected revenue of $1.13 billion to $1.18 billion or 16 to 21 percent increase for the second quarter of 2011.
     Juniper directors began to reveal the company's troubles on June 1, 2011, causing the company's stock to fall $3.64 per share to close at $32.07, and fell further to close at $31.17 per share on July 26, 2011.
     Johnson subsequently issued a press release backtracking on the expected positive outlook for second quarter 2011, putting estimated revenue for that period at $1.07 billion to $1.12 billion. Juniper stock declined even further closing at $24.66 per share on July 27, 2011, according to the complaint.
     Defendants also allegedly "took advantage of the artificially high stock prices for Juniper stemming from the Individual Defendants' misconduct - and their own inside information as to the true state of affairs - to personally enrich themselves prior to the steep declines in Juniper's stock price."
     By implementing two separate $2 billion stock repurchase program to "prop up" the company's stock price and increase demand for Juniper stock, beginning in 2008, several of the defendants used the opportunity to "unload massive quantities of stock from their own personal holdings," the complaint states.
     A total of 4.7 million shares of Juniper stock was collectively sold for $175.5 million by certain defendant directors on inside information during the relevant period. Had the defendants sold on or after July 27, 2011 they would have recouped approximately $59.3 million less.
     Juniper directors should have known that the company's stock price was inflated and that the company was overpaying for stock it purchased through the stock repurchase program, the suit adds.
     The plaintiff is represented by Bramson Plutzik Mahler & Birkhaeuser LLP.