Quest Software Inc. is locked into a shareholder dispute right now over the chief executive’s rush to sell the company. This move comes as no surprise, as the CEO was attempting to get out before a regulation committee was able to investigate, but some argue his actions imply a sense of desperation and bad faith.

Insight is looking to merge with the company in a move that would give them a 35 percent majority over the shareholders, who hope to block the acquisition. The backup software company is valued at two billion dollars in this most recent offer following a series of maneuvers which a lawsuit claims undermined Quest’s value at the benefit of the CEO.

If the shareholders have their way, rather than the chief executive officer, then the company is going to hold out for better offers. Four shareholders have sued the company thus far, as far as we know, and the suit is looking to block this acquisition as well as future mergers which would further devalue the company.

The suit comes in the wake of a report of material weakness in financial reporting. To some shareholders, this would seem to imply that some within the company were fully aware of moves being made to hurt the company at the benefit of executive officers.

The case may set a new precedent regarding exactly how much input shareholders can have against the CEO, or it may simply prove Quest’s Executive Office to be innocent of any unethical dealings.

Source: Reuters Canada, “Quest seeks sale to avoid scrutiny, lawsuit claims,” Tom Hals, April 4, 2012