Tuesday, June 06, 2006

Vonage Stockholder Lawsuit

With a ring of truth, Vonage gets hit with its first stockholder lawsuit. Telecomweb reports, "Basically, the Motley Rice suit charges Vonage with hyping the $531 million IPO by offering shares to Vonage customers. Some 4.2 million shares were set aside for Vonage customers. It did that, the lawsuit alleges, because it couldn't get enough institutional investors interested - and Vonage insiders were getting desperate." [my note: no one promised you guys a rose garden - and if any 2 of you had read the IPO numbers, you would have seen that it wasn't promising.] "Defendants, realizing that institutional investors who normally buy in IPOs would be reluctant at best to purchase Vonage shares as-priced, pre-sold at least 13.5 per cent of the company's IPO shares to company customers in violation of NASD Rule 2310," Motely Rice alleged. "NASD Rule 2310 requires that a company recommending the purchase or sale of its securities to a customer must have a reasonable basis for believing that the recommendation is suitable for the customer. " [If Institutional Investors wouldn't touch it, why did all you day-trading, didn't-win-the-lottery fools?]

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