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To: Jack T. Pearson who wrote (73656)	3/30/2001 7:02:09 PM
From: Haim R. Branisteanu	Read Replies (3) \| Respond to of 99985

Red Hat, PlanetRx.com Join Other Internet Firms Sued Over IPOs By David Glovin New York, March 30 (Bloomberg) -- Red Hat Inc. and PlanetRX.com Inc., firms whose shares soared when they went public two years ago, are the latest Internet companies to be sued by investors claiming their public offerings were dishonest. The federal lawsuits, filed this week in New York, make the same fraud allegations that investors have advanced in cases against VA Linux Systems Inc., Ariba Inc., and Calico Commerce Inc., whose shares also surged before collapsing last year. More suits will follow, a plaintiff's lawyer said. ``We're trying to do the biggest dot.coms and tech names up front, so that people see a large number of these firms' IPOs were manipulated,'' said New York attorney Howard Sirota, who has filed many of the cases. The suits claim that the companies and their underwriters allocated shares in their IPOs to some investors without revealing that the investors agreed to buy shares later at progressively higher prices. Such ``tie-in arrangements'' distort a stock's market price, the suits say. The plaintiffs also say that some investors who received coveted shares agreed to pay inflated commissions on transactions in other securities underwritten by the banks. Neither the companies nor the banks disclosed this, the plaintiffs say. ``These payoffs were, in a sense, kickbacks,'' Sirota said. Earlier this month, Sirota and another lawyer, Christopher Lovell, brought a similar case against seven major underwriters, including Morgan Stanley Dean Witter & Co. and Goldman Sachs Group LP. Their antitrust suit says the banks' scheme to inflate commissions began as early as March 1997. Neither Morgan Stanley nor Goldman Sachs would comment. IPOs Shares in Red Hat, the top U.S. distributor of the free Linux computer operating system, went public at $14 and closed at $52.06 after its August 1999 IPO. In late trading today, the stock was up 29 cents, to $5.98. As poorly as Red Hat has performed, PlantetRX.com has done even worse. The online drugstore has seen its stock fall to 27 cents from $292 less than two years ago. The South San Francisco, California-based company announced this week that it plans to sell all its assets. A spokeswoman for Durham, North Carolina-based Red Hat said the complaint lacks merit. PlanetRX.com's spokeswoman didn't return a call. The lawsuits all seek class action status. According to the Bloomberg IPO Index, stocks that have gone public in the last year are down 61.9 percent. The lawsuits come on the heels of press reports that federal prosecutors and the Securities and Exchange Commission are probing whether IPO investors paid inflated commissions in return for a chance to buy shares. Lawyers don't know exactly how many IPO suits they'll file in coming months, but Sirota believes ``a great minority'' of tech company IPOs were manipulated. quote.bloomberg.com