Current shareholders of Insight Enterprises, Inc. (NASDAQ: NSIT), who have owned Insight stock since January 2002, may be able to assert claims against Insight’s management for fraud, abuse and corporate waste. Insight’s management is charged with abuse arising from two earnings restatements, multiple SEC investigations, a $70 million options backdating scandal, illicit executive compensation, and security class action lawsuits.
Shareholders accuse Insight’s directors and senior executives of breaches of fiduciary duty, waste of Insight’s corporate assets, and abuse of their control of Insight, including gross mismanagement and unjust enrichment. Among other things, stockholders allege Insight’s directors failed to recover $30+ million in executive compensation improperly paid by Insight from 1995 and 2005, causing Insight to overstate its publicly-reported earnings during its entire history as a publicly-traded company.
Shareholders allege executive and employee stock option grants were improperly “backdated,” resulting in Insight spending more than $15 million in professional fees to restate its 1995-2005 earnings in 2006, and to defend an SEC investigation.
Shareholders also allege Insight engaged in accounting fraud. Insight executives accomplished the fraud by improperly withholding customer refunds and supplier invoice payments. These misreported refunds and payments were illegally reported as “profits” in Insight’s publicly-disseminated financial reports from 1996 to 2008, resulting in the overpayment of over $40 million in excessive executive compensation.
Insight CEO Rich Fennessy at NASDAQ's opening bell.
Insight would again post a $60+ million restatement reported in February 2009, exposing Insight to another SEC investigation and hundreds of millions of dollars in potential liability in several stock fraud class actions. Insight was forced to admit its directors and senior executives operated Insight without adequate internal controls, and admitted the accounting irregularities were intentional.
Shareholders further allege Insight paid over $70 million in improper excessive compensation. This compensation was wrongly justified by tens of millions of dollars in earnings being falsely reported. Insight’s directors made no effort to recover the illicit compensation payouts, nor have they tried to recover the tens of millions of dollars in professional fees Insight has spent twice restating its financial results, as well as defending two SEC investigations and defending multiple shareholder class actions.
If you are an Insight Enterprises (NSIT) stockholder, and have owned Insight stock since January 2002 and wish to learn about your rights, or wish to participate in litigation against Insight, please call 1-619-573-0007.
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