Cisco Systems, the world's leading maker of Internet equipment, is being sued by shareholders who claim it misled them about its performance.
The shareholders say Cisco made false statements about its products, financial results and business between August, 1999, and this month.
They allege that this caused Cisco's stock to trade as high as $82 per share, but disappointing second quarter results in February allegedly caused the share to decline to less than $30 per share.
The shareholders' complaint alleges that, as a result of Cisco's conduct, the plaintiffs and other investors suffered.
The news comes a day after the announcement that a Cisco executive was arrested and accused of embezzling more than £7 million.
Mr Robert Gordon, a vice-president of business at Cisco in San Jose, California, is charged in an FBI affidavit of having fraudulently acquired more than 30,000 shares of stock in the Internet Security Services Group.
The affidavit alleges Gordon sold those shares after transferring them into a company he started in the Bahamas. Cisco called in the FBI and is helping the investigation.
Cisco is set to cut 8,500 jobs from its global staff base of 40,000 after issuing a profits warning last week.
Irish firm Horizon Technology today revealed that its Internet working training and consulting division has signed a major deal with Cisco.
PA