This lawsuit is a derivative action, which is brought by Plaintiff Elizabeth Herrera, a shareholder of VASCO Data Security International, Inc., on behalf of VASCO nominally, against certain current and former members of VASCO’s Board of Directors, named as Defendants in the complaint. VASCO is an IT security company that, through its operating subsidiaries, designs, develops, markets, and supports hardware and software security systems that manage and secure access to information assets worldwide. VASCO Data Security – U.S. is headquartered in Oakbrook Terrace, Illinois and VASCO Data Security – Belgium is headquartered in Brussels, Belgium. VASCO sells its security solutions through its direct sales force, distributors, resellers, and systems integrators.
Who Is Affected?
This federal securities fraud action is brought derivatively in the right and for the benefit of VASCO to redress the breaches of fiduciary duty and other violations of law by Defendants. VASCO is an IT security company that, through its operating subsidiaries, designs, develops, markets, and supports hardware and software security systems that manage and secure access to information assets worldwide. VASCO is incorporated in Delaware and is headquartered in Oakbrook Terrace, Illinois. Its shares trade on NASDAQ under the ticker symbol “VDSI.”
This shareholder derivative lawsuit was filed on October 8, 2015 and is captioned Elizabeth Herrera, Derivatively on Behalf of VASCO Data Security International, Inc. v. T. Kendall Hunt, et al. and VASCO Data Security International, Inc., Nominal Defendant. It was filed in the Eastern Divisions of the Illinois Northern District Court and its civil docket number is 1:15-cv-08937. The relevant period runs from February 18, 2014 through present.
The complaint alleges that as a result of the Board of Directors’ false and materially misleading statements, (1) VASCO’s products were illegally sold to parties in the Islamic Republic of Iran (“Iran”), in violation of federal laws prohibiting such sales and (2) VASCO lacked adequate internal controls in violation of the Board’s fiduciary duty to exercise good faith to ensure that VASCO’s financial statements were prepared in accordance with GAAP and taking appropriate action to correct the misconduct.
Among the allegations in the complaint are: (1) dissemination of false and misleading information; (2) breach of fiduciary duties for failing to maintain internal controls; (3) poor or improper management and control of the company; (4) unjust enrichment; (5) abuse of control; and (6) waste of corporate assets.
As a direct and proximate result of Defendants’ failure to perform their fiduciary obligations, VASCO has sustained significant damages, not only monetarily, but also to its corporate image and goodwill.
We will update this case in early 2016.