K., I suppose it was just a matter of time before this predictable shareholders derivative law suit was filed. It would be educationally helpful if a copy of the complaint or a link to its text were to be published on the thread.
Sy
siliconinvestor.com
Suit Filed by Law Firm of Sirianni & Youtz Seeks Recovery of $2 Billion in Damages
Present and Former Officers and Directors At InfoSpace Sued for Illegal Insider Trading
SEATTLE, Apr 3, 2001 (BUSINESS WIRE) -- Seeking recovery of approximately $2 billion in actual damages, an InfoSpace stockholder has filed suit in the Superior Court of Washington for King County against present and former officers and directors of InfoSpace.
The "Shareholders Derivative Suit," filed by the Seattle law firm of Sirianni & Youtz on March 19, 2001, seeks recovery directly for InfoSpace. According to attorney Steve Sirianni, such a suit is brought when a company has claims against its own management. Officers and directors are generally reluctant to authorize a suit against themselves, so a non-insider shareholder makes claims "derivatively," in behalf of the company.
The suit alleges that starting in 1999, officers and directors dumped InfoSpace stock, realizing hundreds of millions of dollars in profit. They did so knowing that Internet advertising, the company's primary source of revenue, could not be profitable or support InfoSpace's operations and growth, while failing to disclose this fact to the investing public. Because these officers and directors realized personal profits by illegal insider trading, they violated their fiduciary duties both to InfoSpace and to its shareholders.
Many of these same officers and directors also recommended and approved the merger on October 12, 2000 between InfoSpace and Go2Net, which cost InfoSpace in excess of $1.5 billion. The suit alleges that these insiders knew that Go2Net had little or no value to InfoSpace, and that they only approved the merger to create the impression that InfoSpace's business and market share were burgeoning.
The complaint also states that officers and directors improperly sold millions of shares of InfoSpace stock in late 2000 and early 2001, knowing the merger had failed but before disclosing this fact to regulators or to the investing public.
Naveen Jain, InfoSpace's founder, Chairman and CEO, and a primary defendant in the derivative suit, initially stated that the merger created a bigger opportunity than when Bill Gates and Paul Allen formed Microsoft. Jain recently acknowledged that the merger was a "failed experience."
The suit also claims that several present and former officers and directors of the company jeopardized "pooling of interests" accounting treatment for InfoSpace's mergers with Go2Net, as well as with Prio, a California-based e-commerce company. To maintain pooling of interests accounting treatment for mergers, officers and directors of the merging entities must refrain from selling their stock for a specific period of time. However, several of the officers and directors sold large quantities of stock during the restricted periods, while other officers and directors did nothing to prevent such sales. According to publicly filed materials signed by some of the defendants in behalf of InfoSpace, loss of "pooling of interests" accounting treatment would cause "significant adverse impact" to the company.
Sirianni & Youtz, a Seattle law firm, represents the plaintiff. Stockholders or others desiring or possessing information relevant to the claims made on behalf of InfoSpace, are encouraged to email inquiries or comments to Sirianni & Youtz, at infospace@sylaw.com.
Contact:
Sirianni & Youtz
Steve Sirianni, 206/223-0303
ssirianni@sylaw.com
or
The Bartlett Group
Barry Bartlett, 206/285-0673
bartgroup@earthlink.net |
