The
paper discusses Peregrine Systems Inc. which had a security fraud class action brought on behalf of purchasers of the common
stock. The lawsuit concerned violations of federal
securities because they had misleading statements that inflated the price of the securities. Two of the company's top two officers resigned. This paper, written in the form of a memo, investigates what happened to the accounting system of Peregrine Systems and how problems like these can be avoided in the future.