Further details have been revealed about the civil action being taken against former long-serving prime minister Sir John Key.
1News has viewed the full 30-page court document that was filed in a California court.
Sir John has been named in his role as a director of the multibillion-dollar, multinational cyber security company Palo Alto.
The plaintiff, Nathan Silva, brought the case against 12 current and former “executive offices and members of the Company’s Board of Directors” for “breaches of fiduciary duties, unjust enrichment, waste of corporate assets” and violations of the Securities Exchange Act.
It outlines how on February 20 the company released updated financial results which showed a worse financial position than expected.
The court documents allege the defendants - including Sir John Key – had previously "recklessly" made false statements about the increased market share that the company’s new AI offerings were driving and the level of growth, among other claims.
The court documents say: “As a direct and proximate result of the Individual Defendants’ misconduct, Palo Alto has lost and expended, and will lose and expend, millions of dollars.”
Referred to as “Defendant Sir John Key” in the documents, it revealed the former market trader is chairperson of the board’s compensation and people committee and a member of the audit and security committee. He was paid US$380,355 (NZ$624,082) for that in the 2023 financial year.
As a member of the audit committee, he is named with three others on that committee as being “specifically charged with the responsibility to assist the Board in fulfilling its oversight responsibilities related to…financial reporting and the underlying internal controls and procedures over financial reporting".
It alleges those defendants breached their duties by “failing to prevent, correct or inform the Board of the issuance of material misstatements and omissions regarding the Company’s business, finances, and operations as alleged".
A summons was filed on April 23.
Sir John released this statement to 1News late yesterday about the case:
“Along with the other directors of Palo Alto Networks I have been named in a series of copycat lawsuits brought by three shareholders based on unproven allegations against the company in relation to our second quarter earnings update. Such lawsuits are not uncommon in the United States hence why this action has received very little media coverage offshore.
"In my view there is no merit to any of the claims.
"Palo Alto Networks has very strict share trading policies for its senior management and directors inline with SEC guidelines.
"At all times I have followed these rules.
"As this matter may well be before the courts I will not be making any further comments.”
The plaintiff has asked for a jury trial and if successful, damages in the form of costs and an improvement in the company’s governance and internal procedures.
At this stage, the next hearing for the case is in July.
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