… And Robbins Geller Rudman & Dowd …

Robbins Geller Rudman & Dowd LLP announced that a class action has been commenced in the United States District Court for the Eastern District of New York on behalf of purchasers of FalconStor Software, Inc. common stock during the period between February 5, 2009 and September 29, 2010.

The complaint charges FalconStor and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The Company develops, manufactures and sells network storage software solutions in the United States and internationally. It also provides related maintenance, implementation, and engineering services. The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and its prospects.

Specifically, defendants misrepresented and/or failed
to disclose the following adverse facts:

• that the Company was experiencing weak demand for its products and services;
• that the Company was making improper payments to secure a contract with at least one of the Company’s customers; and
• as a result of the foregoing, defendants lacked a reasonable basis for their positive statements about the Company and its prospects.

Then, on September 29, 2010, FalconStor announced that ReiJane Huai "resigned from all of his positions with the Company, effective immediately." The press release stated that Mr. Huai "tendered his resignation following his disclosure that certain improper payments were allegedly made in connection with the Company’s contract with one customer." In reaction to Mr. Huai’s resignation and the revelation of improper payments to a certain customer, shares of the Company’s stock fell $0.91 per share, or 22%, to close at $3.15 per share, on unusually heavy trading volume.