updated 01:00 pm EST, Tue November 22, 2011
OmniVision accused of hurting shareholders
Law firm Milberg has revealed several proposed class action lawsuits against camera sensor maker OmniVision over the iPhone 4S. They accuse OmniVision of keeping secret news that it had lost a camera sensor deal for Apple's phone to Sony. Publicly, it had only vaguely hinted at the loss, leading to both a steep drop in share price then and a second crash after teardowns on the iPhone's October 14 launch revealed that OmniVision had lost at least some of Apple's business.
The lack of disclosure had violated the Securities Exchange Act by not making this information public when it was relevant, Milberg claimed. It hoped to include as defendants anyone who had bought OmniVision stock on August 27, a day after the first share crash, and the day before the iPhone 4S' release.
It wasn't mentioned what if any damages were being claimed, although a class action usually involves smaller payouts to everyone who claims rather than large payouts.
Whether or not the lawsuit has merit is uncertain. To have met Milberg's demands, OmniVision would have had to have given out a detail of the iPhone 4S in advance, likely violating a confidentiality pact with Apple.
Such lawsuits aren't uncommon after major stock value drops. While they sometimes have merit, many are intended as publicity grabs from law firms hoping to get recognition that attracts more clients. The cost of having cases dismissed is often considered worth the expense.