Four lawsuits seeking class action status have been filed against slot machine giant International Game Technology, alleging that executives from the Reno-based gaming equipment maker put out false statements about the company's financial prospects as its stock price tumbled in value.
The lawsuits, filed in federal court in Nevada, address owners of IGT's shares from between Nov. 1, 2007, and Oct. 30, 2008. During that time, IGT's stock price on the New York Stock Exchange fell from as high as $49 per share to below $10 a share.
IGT closed Wednesday at $19.97, down 64 cents, or 3.11 percent.
The lawsuits named the company as a defendant, along with former President and Chief Executive Officer TJ Matthews, who is IGT's chairman, Chief Financial Officer Pat Cavanaugh and Chief Accounting Officer and Treasurer Daniel Siciliano.
The lawsuits also allege that company officers, including Matthews, sold nearly $29 million in their own shares in late 2007 and early 2008 before stock prices began to fall.
IGT spokesman Ed Rogich said the company policy is to not comment on pending lawsuits.
One lawsuit, filed on behalf of the International Brotherhood of Electrical Workers Local 697 Pension Fund, said the IGT executives overstated the company's financial results and prospects, which emphasized IGT's efforts to expand into server-based gaming. It alleged IGT did not disclose that substantial funds had been directed into server-based gaming research and development, which "materially compromised the company's growth prospects and undermined defendants' optimistic statements."
IGT has announced in recent months several server-based gaming system installments. Its largest server-based gaming rollout is planned for December at Aria at CityCenter.
Attorneys for the firms that filed the lawsuits between Thursday and Monday could not be reached for comment.
Gaming analysts were not impressed with the lawsuits.
Alan Woinski, who follows the casino industry for Gaming USA Corp., said IGT's investments into server-based gaming "sound more like regular business decisions that did not work out rather than something fraudulent."
Union Gaming Group principal Bill Lerner said similar lawsuits often happen in sectors when there is a material decline in a publicly traded company's price per share.
"Oftentimes, they are found to have no merit, but that's not to say there aren't legitimate ones," Lerner said.
The stock prices of IGT and other slot machine makers fell during the same time period, Lerner said, because casinos had stopped replacing older slot machines, looking to save costs because the recession had reduced customer spending.