The sharks smell blood

This didn't take long. As a result of Sourcefire announcing they would miss their first quarter numbers, the firm of Kahn, Gauthier, Swick, LLC announced they would commence an investigation.  The investigation will look into if any violations of federal security laws took place regarding materially false or misleading statements in the Sourcefire prospectus.  They will also be looking into whether any insiders sold any stock in violation of federal securities laws.  Obviously, it seems the aim is to lay the groundwork for a potential class action law suit.  In fact they ask any Sourcefire shareholder or purchaser of stock to contact them if they would like to discuss their legal rights.  Sounds like the suit won't be far around the corner.

I don't have any more facts than anyone else, but I assume the prospectus details the potential of Sourcefire not hitting their numbers.  But with these kinds of suits, often times the economics of defending a suit outweigh the principles of right and wrong.  What a shame for Wayne, Marty and team.  Lets hope that the investigation really gives them no basis for any suit.

The question has to be asked though, what effect will this have on future IPO's by security companies.  Does it close the door that seemed to have been opened with the IPO?  I think it might.  The bottom line is that in todays market companies that go public have to have large, predictable revenue streams.