VMware, Executives Must Defend Suit on Accounting, Insider Sales

VMware Inc. shareholders adequately alleged the cloud computing company manipulated its revenue while executives engaged in insider trading, a federal court ruled.

The lead plaintiff, a pension fund, also successfully stated an insider trading claim against then-CEO Patrick Gelsinger, Judge Edward J. Davila said for the US District Court for the Northern District of California. Gelsinger and chief financial officer Zane Rowe also face “control person” liability claims for the underlying alleged securities fraud, Davila said. Gelsinger is currently CEO of Intel Corp.

Davila dismissed a shareholder derivative lawsuit over the revenue issues March 22. VMware consented to a cease-and-desist ...