Dr. Hakala said providing false information misleads the public. Investors have to rely on what a company says or does in its filings with the SEC. If a company doesn't publicly disclose internal information, the share price can be affected. Basically it is alleged that JDSU didn't accurately portray the company's condition during certain time frames, which caused the stock prices to be ‘inflated' or worth more than the market value had the truth be known. Dr. Hakala said relevant truth is truth relevant to the issues, i.e., what a company is really seeing in terms of its inventory, sales, goodwill, etc.
Dr. Hakala testified that stock inflation could cause investors to lose money. If an investor buys an inflated stock, like a ‘hot potato' and sells it quickly, there wouldn't be much of a loss. But if the stock is bought at an inflated price and not immediately sold, eventually someone loses. Dr. Hakala said relevant truth will cause prices of inflated stocks to fall.
Using his detailed computations, Dr. Hakala said Kalkhoven had $589,667,387.00 in JDSU stock sales in August 2000, and of that, Dr. Hakala calculated $179,999,475.53 was due to inflation of the stock. Kalkhoven left JDSU in May of 2000.
The August 2000 share price ranged from $116.87 on 1 August to $124.48 on 31 August 2000. Thursday 1 November 2007 the sale price of JDSU closed at $14.87, down $0.59.
