Marketwatchcom Sued by Investor Who Claims Fraud During IPO
New York, April 18 (Bloomberg) -- A Marketwatch.com Inc. investor sued the financial news Web-site owner for allegedly defrauding him in the company's initial public offering.
The suit, filed Tuesday in New York by investor Laurence Bonilla, claims that Marketwatch.com and several underwriters allocated shares in the IPO to some investors without disclosing that those buyers had agreed to purchase shares later at progressively higher prices. Marketwatch.com owns the CBS Marketwatch financial news Web site.
``Unbeknownst to investors who purchased in the aftermarket, the increase in share price was a result, in part, of the tie-in arrangements that locked in demand for Marketwatch shares at levels well above the offering price'' Bonilla says in his complaint.
The suit was filed by the same lawyers, Christopher Lovell and Howard Sirota, who have accused seven major investment banks of colluding to allocate IPO shares in other offerings, including those of Marimba Inc., United Parcel Service Inc., and Ariba Inc. The Marketwatch.com suit, like the others, seeks class-action status.
Marketwatch went public at $17 a share on Jan. 15, 1999, and shares climbed as high as $97.50 that day. The stock lost 15 cents today, falling to $3.15, on the Nasdaq Stock Exchange.
Dan Silmore, a spokesman for San Francisco, California-based Marketwatch.com, said the company didn't have a comment on the suit.
According to the complaint, Marketwatch.com and its underwriters required clients to kick back part of their profits in the form of secret commissions, a violation of federal securities laws. The suit seeks undetermined damages.
Bloomberg L.P.'s Bloomberg News competes with Marketwatch.com.
Apr/18/2001 16:51 ET
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