Class Action Suit Filed Against FileNet Corporation and its Officers and Directors Alleging Misrepresentations and Insider Trading.

SAN DIEGO--(BUSINESS WIRE)--Dec. 23, 1996--A class action has been commenced in the California Superior Court for Orange County by plaintiff Michael I. Goldman on behalf of purchasers of FileNet Corporation ("FileNet") common stock during the period October 19, 1995 to July 2, 1996.

The complaint charges FileNet and certain of its officers and directors with violations of the California Corporations, Civil and Business & Professions Codes. FileNet markets and services document image and workflow software products. During the Class Period, the defendants artificially inflated FileNet stock to as high as $67 per share based on representations that FileNet's core business and Watermark and Saros business units were rapidly expanding, and that FileNet was successfully integrating its product lines and sales and support functions to create a single source solution for all of a company's document imaging and management needs. However, just a few months later, FileNet revealed that demand for its Saros products was, in fact, soft and sales of that product line were well below expectations, adversely impacting FileNet's results for the first quarter of 1996. Upon the revelation on April 1, 1996 of the poor results for the first quarter, FileNet's stock immediately collapsed from $57-7/8 to $45D3/4 per share. Defendants nevertheless reassured the market as to the strength of FileNet's core business and Watermark unit until July 2, 1996, when defendants revealed that sales in the second quarter in all of its units were weak, again adversely impacting earnings. FileNet's stock price again plunged, from a closing price of $33 on July 2, 1996 to a closing price of $23-3/4 on July 3, 1996. Before the truth came out, however, defendants sold over 200,000 shares of their FileNet stock at artificially inflated prices as high as $54.50 per share, pocketing over $10.5 million in illegal insider-trading proceeds. Several of FileNet's insiders, including FileNet's CFO and the senior vice presidents of International and Customer Services and Support, sold over 50% of their FileNet stock.

Plaintiff seeks to recover damages on behalf of all purchasers of FileNet common stock during the Class Period (the "Class"). He is represented by Milberg Weiss Bershad Hynes & Lerach LLP and Burt & Pucillo, who have expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.

Milberg Weiss has been actively engaged in commercial litigation, emphasizing securities and antitrust class actions, for more than 20 years. The firm has offices in New York, San Diego, San Francisco and Los Angeles and is active in major litigations pending in federal and state courts throughout the United States. The firm's reputation for excellence has been recognized on repeated occasions by courts which have appointed the firm to major positions in complex multi-district or consolidated litigations. Milberg Weiss has taken a lead role in numerous important actions on behalf of defrauded investors, and has been responsible for a number of outstanding recoveries which, in the aggregate, total approximately $2 billion. For additional information about Milberg Weiss, see the firm's website at http://www.milberg.com .

If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, William Lerach or Blake Harper of Milberg Weiss at 800/348-6192.

CONTACT: Milberg Weiss

William Lerach or Blake Harper, 800/348-6192