Stull, Stull & Brody Announces Class Action Against InterNAP Network Services Corporation.
Business Wire, July 24, 2001 p2821
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Business Editors & Legal Writers
NEW YORK--(BUSINESS WIRE)--July 24, 2001
Notice is hereby given that a class action lawsuit was filed on July 24, 2001, in the United States District Court for the Southern District of New York,
on behalf of purchasers of InterNAP ("InterNAP") (NASDAQ:INAP) common stock between September 29, 1999 and July 3, 2001, inclusive (the
"Class Period").
The complaint alleges that defendants violated the federal securities laws by issuing and selling InterNAP common stock pursuant to the September
29, 1999 IPO 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.
The complaint alleges that, in exchange for the excessive commissions, members of the underwriting group allocated InterNAP shares to customers
at the IPO price of $20 per share. To receive the allocations (i.e., the ability to purchase shares) at $20, 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 InterNAP stock rocketed upward (a practice known on Wall Street as "laddering") was intended to (and
did) drive InterNAP's share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the underwriters and
their customers to reap enormous profits by buying stock at the $20 IPO price and then selling it later for a profit at inflated aftermarket prices, which
rose as high as $24.59 on September 29, 1999, a 32% increase on its first day of trading.
Rather than allowing their customers to keep their profits from the IPO, the complaint alleges, the underwriters required their customers to "kick back"
some of their profits in the form of secret commissions. These secret commission payments were sometimes calculated after the fact based on how
much profit each investor had made from his or her IPO stock allocation.
The complaint further alleges that defendants violated the Securities Act of 1933 because the Prospectus distributed to investors and the Registration
Statement filed with the SEC in order to gain regulatory approval for the InterNAP offering contained material misstatements regarding the
commissions that the underwriters would derive from the IPO transaction and failed to disclose the additional commissions and "laddering" scheme
discussed above.
Plaintiff seeks to recover damages on behalf of class members and is represented by, among others, the law firm of Stull, Stull & Brody. Stull, Stull &
Brody has litigated many class actions for violations of securities laws in federal courts over the past 25 years and has obtained court approval of
substantial settlements on numerous occasions.
If you bought the common stock of InterNAP between September 29, 1999 and July 3, 2001, you may, no later than September 3, 2001, request the
Court appoint you as lead plaintiff.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the
Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately
represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any
recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Stull, Stull & Brody, or other counsel of
your choice, to serve as your counsel in this action.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact
Tzivia Brody, Esq. at Stull, Stull & Brody by calling toll-free 1-800-337-4983, or by e-mail at SSBNY@aol.com, or by fax at 212/490-2022, or by writing
to Stull, Stull & Brody, 6 East 45th Street, New York, NY 10017.
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