Just a few random thoughts Re: the lawsuit...
Many of us who "purchased" shares of INSP (or "acquired" shares, through the 10/12/00 "merger" with GNET) during the "Class Period" (1/26/00-1/30/01) of the recent class action lawsuit (first filed on 6/19/01)...have grave concerns about whether this most recent lawsuit against InfoSpace will in fact just end up doing additional damage to the value of the already unbelievably decimated share value, from its "high." I personally have YET TO READ OR HEAR a single word that leads me to believe anything positive comes from such lawsuits...other then that the only real beneficiaries--who often hit a major gold mine or financial "jackpot" for themselves on these deals--are the many attorneys scrambling to get involved, especially those who end up representing the "plaintiffs," if they should prevail (although, I'm sure the "defendants" attorneys end up making a bundle in legal fees as well...win or lose). IMHO however, it's not a completely black-and-white issue at all, but contains many shades of "legal," gray muddling up the whole thing.
Now, playing "Devil's Avocate" (depending on your viewpoint) for a moment, and setting aside the concerns for the "short term" stock share price ramifications of this particular lawsuit. It's conceivable that there could be several potentially positive "long term" scenarios for a company and its shareholders coming out of such a lawsuit. For example, as a shareholder of a company (any company), I sure as heck would want to know if the leadership and executives have been guilty of violating securities laws. I would certainly want to know if the company and its officers were guilty of fraud, and/or the dissemination of intentionally misleading and false information to the public; including shareholders, analysts, institutional investors, and the financial press. I most certainly would want to know if company "insiders" were guilty of intentionally and artificially manipulating the stock's price, while personally reaping huge financial profits by illegal actions on their part.
IMHO, if a company, and/or its leaders were in fact guilty of participating (intentionally or otherwise) in illegal activities, it should most definitely be brought to the light of day, and resolved in a court of law. "Long term," a company which has been found guilty of participating in illegal activities in the past, could potentially completely turn around their entire company's business practices. This perhaps may require a completely new management team and/or a new Board of Directors...but the company could potentially end up as a much healthier, stronger and more profitable "enterprise" with a much better business model in the long run...thus providing a "real" and lasting benefit to both past and future shareholders and investors. If a company and its management is in fact involved in illegal activities, and is allowed to continue those practices undiscovered and unimpeded, the shareholders will most certainly always eventually suffer in the long run, when it's all finally exposed...and/or the company fails and goes completely out of business, having an ultimate share value of exactly ZERO.
On the other hand, however...apparently the issues of discovering and exposing the REAL "truth" in these type of "class action" lawsuits is often never truly resolved. The parities frequently end up reaching some sort a "settlement," greatly reducing the potentially huge "financial" risks for both the "plaintiff's" attorneys (working on a "contingency" basis), and the company. And so the lawsuit often never goes before a jury trial, and never has a final "verdict," reaching any kind of final "legal" determination regarding who was actually right and who was wrong...in the eyes of the law. And so the "alleged" unlawful behavior of the company being sued is not truly determined, one way or the other...and the "settling" of the case often does not result in the defendant admitting either guilt or innocence. So everybody goes home, with a bunch of lawyers a whole lot richer, and all the shareholders of the company left "holding the (proverbial) bag" of sh*t, eventually footing the entire bill for the entire lawsuit, one way or another.
Getting back to the specifics of this particular lawsuit against InfoSpace, it is my understanding that those of us who qualify as members of the "Class" in the "complaint," are in fact already being represented by legal counsel, whether we like or not...and whether we want to be or not. On August 20, 2001 the lawyers will be presenting the case to the judge(s) apparently already assigned to the case. I don't know if the actual wording in the lawsuit is simply a bunch of legal mumbo-jumbo, and "class action" boilerplate crap or not. But, as I read it as a layman (coming from a non-legal background), below are what appears to be the key allegations that are being charged against InfoSpace and Naveen Jain by the lawsuits. It may all very well end up being thrown out of court as total legal bullsh*t and a completely frivolous lawsuit. InfoSpace and its leaders could all be as innocent and pure as the fresh fallen snow regarding these allegations, and the attorneys swarming around them could be just a pack of money-grubbing legal vultures, out to rip a pound of raw flesh from their easy-picking prey...or, it could turn out to be a completely different story.
Below is my personal attempt to summarize my understanding of the key charges. They appear to be extremely serious allegations to me, and if eventually proven to be true in a court of law...they would most definitely deserve to see the light of day, and be resolved in a "legal" framework, under a court's supervision.
SOME SERIOUS QUESTIONS RAISED BY LAWSUIT:
1. Did Defendants (InfoSpace and Naveen Jain) violate the Securities Exchange Act of 1934?
2. Did Defendants disseminate false and misleading information concerning InfoSpace's "actual" FY 1999 and 2000 financial performance?
3. Did Defendants disseminate false and misleading information concerning InfoSpace's "expected" FY 2001 revenue and earnings?
4. Did Defendants manipulate InfoSpace's "reported" earnings and "expected" FY 2001 performance?
5. Were Defendants' public representations the result of their efforts to manipulate InfoSpace's "reported" earnings and expected FY 2001 performance, and were they also "designed" to allow Jain (and many other company "insiders") to sell millions of dollars of InfoSpace shares at artificially inflated prices?
6. Did Defendants complete a series of acquisitions (including Go2Net) using shares of InfoSpace's "artificially inflated" stock as currency?
I guess as shareholders, the whole d*mn thing is really pretty much completely out of our hands at the moment, and in the hands of the lawyers and the judicial system...for some type of resolution. I don't see much of anything that we can do about it, one way or another, except to just sit back and watch the show.
I'll have butter on my popcorn, please...
and a Wolavers Ale...or two...or maybe even three.
Roger.........and OUT. |
