Cases
Pegasystems, Inc.
Securities Class Action
Overview
Overview
- Date:
- 7/18/2022
- Company Name:
- Pegasystems, Inc.
- Stock Symbol:
- PEGA
- Class Period:
- FROM 5/29/2020 TO 5/9/2022
- Status:
- Filed
- Filing Date:
- 5/19/2022
- Court:
- U.S. District Court: Eastern District of Virginia
Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, announces that a class action lawsuit has been filed against Pegasystems, Inc. (“Pegasystems” or the “Company”) (NASDAQ: PEGA) in the United States District Court for the Eastern District of Virginia on behalf of all persons and entities who purchased or otherwise acquired Pegasystems securities between May 29, 2020 and May 9, 2022, both dates inclusive (the “Class Period”). Investors have until July 18, 2022 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
PEGA develops customer relationship management software. In its SEC filings during the Class Period, PEGA consistently informed investors that its internal “research and development organization is responsible for product architecture, core technology development, product testing, and quality assurance.” The Company also stated that it maintained a written Code of Conduct applicable to its board of directors and all employees “including our principal executive officer,” which included an express commitment: “Never [to] use illegal or questionable means to acquire a competitor’s trade secrets or other confidential information, such as . . . stealing, seeking confidential information from a new employee who recently worked for a competitor, or misrepresenting your identity in hopes of obtaining confidential information.”
On May 29, 2020, Appian Corporation (“Appian”), a principal competitor of PEGA, filed a civil complaint in the Circuit Court for Fairfax County, Virginia against PEGA and fan employee of a government contractor using Appian software, alleging claims for trade secret misappropriation, violation of the Virginia Computer Crimes Act, tortious interference, and statutory business and common law conspiracy (the “Appian Litigation”). The Appian complaint alleged efforts by PEGA to obtain Appian trade secrets through the contractor’s employee, who had access to Appian’s software and materials. The complaint further alleged that PEGA’s own employees, including its Chief Executive Officer (“CEO”), misrepresented themselves as potential customers of Appian partners to improperly gain access to Appian’s trial software.
Despite the obvious materiality of the Appian Litigation, including its allegation that PEGA had essentially stolen Appian’s trade secrets and caused Appian massive damages, in violation of SEC reporting regulations, for nearly two full years during the Class Period Defendants never disclosed or described the Appian Litigation in its quarterly reports on Form 10-Q or annual reports on Form 10-K. When they did finally discuss the Appian Litigation, Defendants falsely assured investors that the claims asserted in the litigation were “without merit,” PEGA faced no exposure in the litigation because Appian’s alleged damages “are not supported by the necessary legal standard of proximate cause,” and, even if PEGA was found liable, it was “unable to reasonably estimate possible damages.”
The Class Action alleges that, during the Class Period, Defendants misrepresented and/or failed to disclose that: (1) PEGA had engaged in corporate espionage and misappropriation of trade secrets to better compete against Appian; (2) Defendants’ product development and associated success was, in significant part, not the result of its own research and product testing but rather the result of such corporate espionage and trade secret theft; (3) Defendants had engaged in a scheme to steal Appian trade secrets, which was not only known to, but carried out through the personal involvement of PEGA’s CEO; (4) PEGA’s CEO and other officers and employees did not comply with PEGA’s written Code of Conduct; (5) PEGA was “unable to reasonably estimate damages” in the Appian Litigation; and (6) as a result of the foregoing, Defendants’ statements about PEGA’s business, operations, prospects, legal compliance, and potential damages exposure in the Appian Litigation were materially false and/or misleading and/or lacked a reasonable basis when made.
The truth regarding PEGA’s fraudulent conduct was revealed after the close of the markets on May 9, 2022, when PEGA issued a press release announcing that the jury in the Appian Litigation had awarded Appian more than $2 billion for PEGA’s misappropriation of trade secrets.
In response to this news, PEGA’s stock price fell 21%, from a closing price of $65.93 per share on May 9, 2022, to a closing price of $52.25 on May 10, 2022. As the market continued to digest the verdict, PEGA’s stock price dropped another 8% to close at $48.07 per share the following day.
If you purchased or otherwise acquired Pegasystems shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Melissa Fortunato by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out the form below. There is no cost or obligation to you.
PEGA develops customer relationship management software. In its SEC filings during the Class Period, PEGA consistently informed investors that its internal “research and development organization is responsible for product architecture, core technology development, product testing, and quality assurance.” The Company also stated that it maintained a written Code of Conduct applicable to its board of directors and all employees “including our principal executive officer,” which included an express commitment: “Never [to] use illegal or questionable means to acquire a competitor’s trade secrets or other confidential information, such as . . . stealing, seeking confidential information from a new employee who recently worked for a competitor, or misrepresenting your identity in hopes of obtaining confidential information.”
On May 29, 2020, Appian Corporation (“Appian”), a principal competitor of PEGA, filed a civil complaint in the Circuit Court for Fairfax County, Virginia against PEGA and fan employee of a government contractor using Appian software, alleging claims for trade secret misappropriation, violation of the Virginia Computer Crimes Act, tortious interference, and statutory business and common law conspiracy (the “Appian Litigation”). The Appian complaint alleged efforts by PEGA to obtain Appian trade secrets through the contractor’s employee, who had access to Appian’s software and materials. The complaint further alleged that PEGA’s own employees, including its Chief Executive Officer (“CEO”), misrepresented themselves as potential customers of Appian partners to improperly gain access to Appian’s trial software.
Despite the obvious materiality of the Appian Litigation, including its allegation that PEGA had essentially stolen Appian’s trade secrets and caused Appian massive damages, in violation of SEC reporting regulations, for nearly two full years during the Class Period Defendants never disclosed or described the Appian Litigation in its quarterly reports on Form 10-Q or annual reports on Form 10-K. When they did finally discuss the Appian Litigation, Defendants falsely assured investors that the claims asserted in the litigation were “without merit,” PEGA faced no exposure in the litigation because Appian’s alleged damages “are not supported by the necessary legal standard of proximate cause,” and, even if PEGA was found liable, it was “unable to reasonably estimate possible damages.”
The Class Action alleges that, during the Class Period, Defendants misrepresented and/or failed to disclose that: (1) PEGA had engaged in corporate espionage and misappropriation of trade secrets to better compete against Appian; (2) Defendants’ product development and associated success was, in significant part, not the result of its own research and product testing but rather the result of such corporate espionage and trade secret theft; (3) Defendants had engaged in a scheme to steal Appian trade secrets, which was not only known to, but carried out through the personal involvement of PEGA’s CEO; (4) PEGA’s CEO and other officers and employees did not comply with PEGA’s written Code of Conduct; (5) PEGA was “unable to reasonably estimate damages” in the Appian Litigation; and (6) as a result of the foregoing, Defendants’ statements about PEGA’s business, operations, prospects, legal compliance, and potential damages exposure in the Appian Litigation were materially false and/or misleading and/or lacked a reasonable basis when made.
The truth regarding PEGA’s fraudulent conduct was revealed after the close of the markets on May 9, 2022, when PEGA issued a press release announcing that the jury in the Appian Litigation had awarded Appian more than $2 billion for PEGA’s misappropriation of trade secrets.
In response to this news, PEGA’s stock price fell 21%, from a closing price of $65.93 per share on May 9, 2022, to a closing price of $52.25 on May 10, 2022. As the market continued to digest the verdict, PEGA’s stock price dropped another 8% to close at $48.07 per share the following day.
If you purchased or otherwise acquired Pegasystems shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Melissa Fortunato by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out the form below. There is no cost or obligation to you.
The individual or institution below (“Plaintiff”) has reviewed and agrees to the Bragar Eagel & Squire, P.C. (“BESPC”) retainer agreement and authorizes BESPC to prosecute an action on Plaintiff’s behalf under the federal securities laws or applicable state laws to recover damages on behalf of investors in Pegasystems. BESPC will prosecute the action on a full contingency basis and will forward all costs and expenses.
Case Updates
Retainer Agreement
This will confirm that you have retained Bragar Eagel & Squire, P.C. (“BESPC”) to represent you in connection with potential litigation against Pegasystems (the “Company”) and its directors and officers. BESPC has conducted an investigation and believes that there is a valid basis to assert claims against the Company and its directors and/or officers for violation of federal or state securities laws.
In making this agreement, BESPC is relying upon your representation that you purchased the Company’s shares during the period from 5/29/2020 to 5/9/2022 (the “Relevant Period”). Please provide us with documentation of your trading history in the Company’s stock by emailing a relevant copies of your brokerage statements to investigations@bespc.com. If you have any questions or need assistance, please call us at (212) 308-5858.
The terms under which we will represent you and your responsibilities as a potential representative plaintiff are set forth below.
You will have an obligation to remain knowledgeable about the litigation and participate in decisions concerning the progress of the litigation. If BESPC is appointed as lead counsel or in a similar capacity in the action, we will provide you with copies of all pleadings in the litigation for your review and approval, circumstances permitting, before they are filed with the court. BESPC will also promptly advise you of any significant developments in the litigation.
As a representative plaintiff, you cannot have any interest antagonistic to or in conflict with other Class members or the Company, as applicable, concerning the claims we are pursuing or any relationships with any of the named defendants that would in any way impair your ability or incentive to obtain the best possible result. You agree that neither you nor any of your affiliates or agents will trade stocks while in the possession of any material non-public information you may receive in connection with the litigation. In addition, as a representative plaintiff, you may be required to continue holding Company shares. Please contact us before buying or selling Company shares.
BESPC may associate with other counsel to assist in the prosecution of this litigation. Any recovery of fees and costs will be shared with such counsel, determined on a percentage basis or based upon the time spent on the matter, as approved by the court if applicable. The division of work and or fees among co-counsel will not affect the amount of fees received upon a successful completion of the litigation. From time to time, BESPC may utilize contract attorneys to supplement the work of its own employed attorneys. BESPC will supervise the work of all contract attorneys and adopt their work product as its own. You authorize BESPC, as we deem appropriate, to associate with other counsel and to hire experts and consultants to assist in the handling of your claims.
It is possible that you will not be appointed as a lead plaintiff or class representative in the action. However, we may wish to represent you in other litigation related to the wrongful acts giving rise to this case. In such event, we will contact you to discuss the scope of such representation and obtain your approval before moving forward. You also agree that we may contact you with respect to other potential matters on your behalf.
You understand that in the event we secure a recovery for a Class in a class action, you will only be entitled to your proportional share of such recovery as a Class member. You understand that you will not receive any special treatment or receive a greater share of any class-wide recovery based on your service as a named plaintiff or class representative. However, we may ask the Court to approve an additional award to you to compensate you for the time and effort you expend on this matter. Any such award is solely within the discretion of the Court.
BESPC will consult with you regarding any settlement negotiations and seek to obtain your approval for any proposed resolution of this litigation before entering into a final settlement agreement with defendants.
You expressly acknowledge that we have not made any representation to you, express or implied, concerning the outcome of any litigation or other matter in which we represent you.
If you are not chosen as a representative plaintiff and we do not choose to pursue other related litigation on your behalf, we will provide you with notification and this Agreement shall terminate. Otherwise, this Agreement shall remain in effect until the conclusion of the relevant litigation. However, you may terminate this Agreement at any time.
Upon termination, BESPC’s files and papers compiled in connection with its investigation and prosecution of this matter constitute the work product and property of BESPC over which it has complete control with respect to its use and/or disclosure.
This agreement sets forth the entire agreement between the parties and supersedes all other oral or written communications.
Please feel free to contact us at any time should you have any questions or comments in this regard.
In making this agreement, BESPC is relying upon your representation that you purchased the Company’s shares during the period from 5/29/2020 to 5/9/2022 (the “Relevant Period”). Please provide us with documentation of your trading history in the Company’s stock by emailing a relevant copies of your brokerage statements to investigations@bespc.com. If you have any questions or need assistance, please call us at (212) 308-5858.
The terms under which we will represent you and your responsibilities as a potential representative plaintiff are set forth below.
Your Responsibilities as a Representative Plaintiff
As a representative plaintiff, you will have a duty to represent the interests of similarly situated shareholders, i.e., the “Class,” and to participate in the prosecution of this litigation. You may also be asked to provide documents concerning your trading in Company stock and may be asked to sit for a deposition. Accordingly, you should preserve all documents that relate to this case until it has concluded or we inform you otherwise. Relevant documents include any information you have about the Company or your trading in Company stock, no matter how it is recorded or who is keeping it for you. If you have any questions about whether information should be retained, please contact us.You will have an obligation to remain knowledgeable about the litigation and participate in decisions concerning the progress of the litigation. If BESPC is appointed as lead counsel or in a similar capacity in the action, we will provide you with copies of all pleadings in the litigation for your review and approval, circumstances permitting, before they are filed with the court. BESPC will also promptly advise you of any significant developments in the litigation.
As a representative plaintiff, you cannot have any interest antagonistic to or in conflict with other Class members or the Company, as applicable, concerning the claims we are pursuing or any relationships with any of the named defendants that would in any way impair your ability or incentive to obtain the best possible result. You agree that neither you nor any of your affiliates or agents will trade stocks while in the possession of any material non-public information you may receive in connection with the litigation. In addition, as a representative plaintiff, you may be required to continue holding Company shares. Please contact us before buying or selling Company shares.
Contingency Fee and Advancement of Expenses
BESPC will prosecute this litigation on a contingency basis. You will not be responsible for paying any legal fees, costs, or out-of-pocket expenses arising out of or related to the prosecution of this litigation, regardless of the outcome of the matter. If there is a monetary recovery in this action, BESPC will, at the conclusion of the litigation or any segment thereof, apply to the court for approval of an award of attorneys’ fees and reimbursement of expenses. BESPC may also seek a fee if we obtain substantial non-monetary relief for the Class or the Company. The court will then award fees and disbursements (if any) from the proceeds of any judgment or settlement obtained in this litigation, based on factors considered relevant by the court. Such fees, costs, and disbursements will be paid from the entire settlement amount and not only from your share of the settlement amount.
Association with Counsel
BESPC may associate with other counsel to assist in the prosecution of this litigation. Any recovery of fees and costs will be shared with such counsel, determined on a percentage basis or based upon the time spent on the matter, as approved by the court if applicable. The division of work and or fees among co-counsel will not affect the amount of fees received upon a successful completion of the litigation. From time to time, BESPC may utilize contract attorneys to supplement the work of its own employed attorneys. BESPC will supervise the work of all contract attorneys and adopt their work product as its own. You authorize BESPC, as we deem appropriate, to associate with other counsel and to hire experts and consultants to assist in the handling of your claims.
Other Actions
It is possible that you will not be appointed as a lead plaintiff or class representative in the action. However, we may wish to represent you in other litigation related to the wrongful acts giving rise to this case. In such event, we will contact you to discuss the scope of such representation and obtain your approval before moving forward. You also agree that we may contact you with respect to other potential matters on your behalf.
No Special Treatment
You understand that in the event we secure a recovery for a Class in a class action, you will only be entitled to your proportional share of such recovery as a Class member. You understand that you will not receive any special treatment or receive a greater share of any class-wide recovery based on your service as a named plaintiff or class representative. However, we may ask the Court to approve an additional award to you to compensate you for the time and effort you expend on this matter. Any such award is solely within the discretion of the Court.
Settlement
BESPC will consult with you regarding any settlement negotiations and seek to obtain your approval for any proposed resolution of this litigation before entering into a final settlement agreement with defendants.
No Guarantee of Success
You expressly acknowledge that we have not made any representation to you, express or implied, concerning the outcome of any litigation or other matter in which we represent you.
Termination of This Agreement
If you are not chosen as a representative plaintiff and we do not choose to pursue other related litigation on your behalf, we will provide you with notification and this Agreement shall terminate. Otherwise, this Agreement shall remain in effect until the conclusion of the relevant litigation. However, you may terminate this Agreement at any time. Upon termination, BESPC’s files and papers compiled in connection with its investigation and prosecution of this matter constitute the work product and property of BESPC over which it has complete control with respect to its use and/or disclosure.
This agreement sets forth the entire agreement between the parties and supersedes all other oral or written communications.
Please feel free to contact us at any time should you have any questions or comments in this regard.