Investor Sues Tandon; Claims Problems Hidden

Tandon is being sued by a New Jersey shareholder who claims the Chatsworth-based maker of personal computers and disk drives misled investors by failing to disclose problems in 1983 and 1984.

The investor, Milton Engel, who is seeking unspecified damages, filed suits last week in federal district court and Superior Court in Los Angeles. Engel and his attorneys seek to establish their case as a class-action suit, enabling other shareholders from that period to join as plaintiffs.

Engel alleges that the company failed to disclose its difficulties in controlling expenses and in dealing with competitive pressures. He also charges that Tandon failed to reveal design and production problems with new products that eventually contributed to the company’s $135-million loss in its 1985 fiscal year.

Engel bought 2,400 Tandon shares in six purchases from June, 1983, to November, 1984, at prices ranging from $6.50 to $32 a share, according to court papers. Along with Tandon, eight present and former executives of the company were named in the suit, including Sirjang Lal (Jugi) Tandon, the company’s founder, chairman and chief executive.

The company had no comment on the suit, except to note that lawsuits against computer-related companies on similar grounds have become common during the downturn in the computer industry.

Other technology companies sued by shareholders include Chatsworth-based Computer Memories, Xebec, Activision, Vector Graphic, Star Technologies, Altos Computers, Diasonics, Priam, Control Data, and Eagle Computer.

One of the law firms representing Engel is Milberg, Weiss, Bershad, Specthrie & Lerach. The New York-based firm in recent years has been one of the nation’s most aggressive in filing class-action suits for shareholders.