Stull, Stull & Brody Brings Class Actions Targeting IPO Underwriters--Friday August 31, 7:00 pm Eastern Time--
NEW YORK, NY--(INTERNET WIRE)--Aug 31, 2001-- Stull, Stull & Brody announces that allegations in cases filed by it are supported by recent articles that have appeared in The New York Times and The Wall Street Journal about investigations by the United States Justice Department and the Securities Exchange Commission into the manipulation of IPOs. Among the underwriters named as defendants are: Credit Suisse First Boston Corp., The Goldman Sachs Group, Inc., Lehman Brothers, Inc., Merrill Lynch, Pierce, Fenner & Smith, Inc., Morgan Stanley Dean Witter & Co., BancBoston Robertson, Stephens, Inc., and Salomon Smith Barney, Inc.
The lawsuits allege that defendants violated the federal securities laws by issuing and selling common stock pursuant to the IPOs without disclosing to investors that some of the underwriters in the offering, including the lead underwriters, had solicited and received excessive and undisclosed commissions from certain investors.
Specifically, the complaints allege that in exchange for the excessive commissions, defendants allocated shares to customers at the IPO price. To receive the allocations (i.e., the ability to purchase shares) at the IPO price, the underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of IPO stock rocketed upward (a practice known on Wall Street as "laddering") was intended to (and did) drive the share price up to artificially high levels. This artificial price inflation enabled both the underwriters and their customers to reap enormous profits by buying stock at the IPO price and then selling it later for a profit at inflated aftermarket prices.
Among the stocks alleged to have been manipulated were the shares of the following:
Ashford.com, Inc. (NASDAQ: ASFD - news) for the class period between September 22, 1999 and December 6, 2000, inclusive;
SciQuest.com, Inc. (NASDAQ: SQST - news) for the class period between November 19, 1999 and December 6, 2000, inclusive;
Vicinity Corporation (NASDAQ: VCNT - news) for the class period between February 8, 2000 and December 6, 2000, inclusive; and
WebMD Corporation, formerly Healtheon Corporation (NASDAQ: HLTH - news), for the class period between February 10, 1999 and December 6, 2000, inclusive.
Plaintiffs in these actions are represented by Stull, Stull & Brody. Stull, Stull & Brody has litigated many class actions for violations of securities laws in federal and state courts over the past 25 years and has obtained court approval of substantial settlements on numerous occasions. |
