Shareholders Sue Anaheim-Based MTI, Allege Violations

MTI Technology Corp. has been accused of securities violations in a lawsuit filed by some shareholders.

Anaheim-based MTI, which provides data storage products, misrepresented the continuing negative impact of European sales on first-quarter earnings and failed to inform investors of delays in one of its product lines, the federal lawsuit contended.

Before announcing the negative news, three MTI senior officers sold all of their shares for a profit of $2 million, the suit contended. MTI said it believes the suit is without merit and intends to defend itself vigorously.

The class-action suit was filed on behalf of investors who purchased shares of MTI from May 21 through June 9 this year.

For the first quarter ended July 4, MTI Technology earned $4.1 million, or 14 cents a share, with revenue of $49.4 million.

Prior to MTI’s June 9 announcement of lower-than-expected earnings, a First Call consensus of three analysts produced a mean earnings estimate of 17 cents a share for its first quarter.

The day before the announcement, MTI stock closed at $10.53 a share. Two days later, the stock had slumped to $8.75. The shares on Thursday hit a 52-week low of $3.31 before recovering a bit to close at $4, down 75 cents for the day.