SOURCE: Bernstein Liebhard LLP

October 04, 2010 14:22 ET

Bernstein Liebhard LLP Announces Action Filed on Behalf of Investors in FalconStor Software, Inc.

NEW YORK, NY--(Marketwire - October 4, 2010) -  Bernstein Liebhard LLP today announced that an action has been filed in the United States District Court for the Eastern District of New York on behalf of purchasers (the "Class") of FalconStor Software, Inc. ("FalconStor" or the "Company") (NASDAQ: FALC) common stock during the period of February 5, 2009 through September 29, 2010, inclusive (the "Class Period"). 

The complaint charges FalconStor and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The Company develops, manufactures and sells network storage software solutions in the United States and internationally. It also provides related maintenance, implementation, and engineering services. The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company's business and its prospects. Specifically, defendants misrepresented and/or failed to disclose the following adverse facts: (i) that the Company was experiencing weak demand for its products and services; (ii) that the Company was making improper payments to secure a contract with at least one of the Company's customers; and (iii) as a result of the foregoing, defendants lacked a reasonable basis for their positive statements about the Company and its prospects.

Then, on September 29, 2010, FalconStor announced that ReiJane Huai "resigned from all of his positions with the Company, effective immediately." The press release stated that Mr. Huai "tendered his resignation following his disclosure that certain improper payments were allegedly made in connection with the Company's contract with one customer." In reaction to Mr. Huai's resignation and the revelation of improper payments to a certain customer, shares of the Company's stock fell $0.91 per share, or 22%, to close at $3.15 per share, on unusually heavy trading volume.

Plaintiff seeks to recover damages on behalf of all Class members who purchased or otherwise acquired shares of FalconStor during the Class Period. If you purchased or otherwise acquired FalconStor shares during the Class Period, and either lost money on the transaction or still hold the shares, you may wish to join in this action to serve as lead plaintiff. In order to do so, you must meet certain requirements set forth in the applicable law and file appropriate papers no later than November 30, 2010.

A "lead plaintiff" is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiff. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Bernstein Liebhard LLP, or other counsel of your choice, to serve as your counsel in this action.

If you are interested in discussing your rights as a FalconStor shareholder and/or have information relating to the matter, please contact Joseph R. Seidman, Jr. at (877) 779-1414 or

Bernstein Liebhard has pursued hundreds of securities, consumer and shareholder rights cases and recovered almost $3 billion for its clients. It has been named to The National Law Journal's "Plaintiffs' Hot List" in each of the last eight years.

You can obtain a copy of the complaint from the clerk of the court for the United States District Court for the Eastern District of New York.

Bernstein Liebhard LLP
10 East 40th Street
New York, New York 10016
(877) 779-1414

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