Cisco Systems executives are facing a lawsuit from a small shareholder, accusing them of running a stock fraud that netted them $52 million.

The complaint, filed on March 31, is from a small shareholder named Harry Schipper who bought 67 shares of Cisco stock in 2010, worth about $1,551 total. The suit claims that six directors and officers withheld information from the market and made false statements in order to inflate the price of Cisco's stock and give them a chance to sell it before certain negative information came to light.

According to the suit, on May 12 of last year the company reported its financial results for the third quarter of 2010 (Cisco's fiscal year ends in July). The company reported net sales of $10.4 billion and $2.2 billion in income, or 63 percent growth year over year.

In August, Cisco reported results again, and said its net sales were $10.8 billion and net income was $1.9 billion. For the fiscal year Cisco said sales were $40 billion and income $7.8 billion.

In both cases Chief Financial Officer Frank Calderoni said the company was doing well and that the company was in a strong financial position. Schipper says similarly positive statements were made at an investor conference hosted by Deutsche Bank in September. More good news came from the next quarter's earnings release.

Schipper says that the rosy picture executives painted was false. The company, he says, did not say that it was under pricing pressure from Chinese competitors and from its more traditional rivals. Nor did executives say that Cisco had been forced to lower its prices substantially, cutting into profit margins.

That means there was no basis for the positive outlook, Schipper says. When the company issued its next earnings release on Feb. 9. 2011, and during the conference call Cisco said margins were down some 61 percent. That caused the stock to drop by about 14 percent.

The suit says two directors, Larry Carter and former Yahoo! CEO Jerry Yang, along with Chief Executive Officer John Chambers, Robert Lloyd, executive vice president of world operations, Chief Operating Officer Gary Moore, Randall Pond, executive vice president of operations, processes and systems, all sold their stock between May 2010 and January 2011, at prices between $24.61 and $21.57per share.

The price of Cisco after the February press release was $18.92 and it currently trades at about $18. During the period covered in the suit, the stock had topped out at $26.80.

The announcements in February removed what Schipper calls an artificial inflation of Cisco's stock. The fact that the drop was so large and fast, the suit says, means that it was not just because of changed market conditions.

The case is in the U.S. District Court for the Northern District of California, and is Schipper v. Cisco Systems.