Vonage Holdings’ legal troubles continue to mount, as attorneys filed another suit against the voice-over-IP company regarding its initial public offering (IPO) last month.
Law firm Schiffrin & Barroway filed the suit Monday in U.S. District Court in New Jersey, where Vonage is based in the town of Holmdel. The suit alleges that Vonage “failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them,” Schiffrin & Barroway said.
That calls into question whether Vonage made full disclosure of information regarding its management team and its service, including “known” problems with call and fax quality, the firm said.
Vonage also took the unusual step of making shares available directly to its customers at the IPO price of US$17 per share. The Schiffrin & Barroway suit alleges that those customers who chose to participate were “obligated to purchase allocated shares before they received notice that their conditional offers had been accepted, and were led to believe that the IPO would take place later than May 23, 2006.”
In fact, the company went public on May 24 and raised about $531 million, despite shares declining 12.6 percent on the first day of trading. It closed Monday at $11.51.
Motley Rice, a law firm specializing in class-action lawsuits, filed suit against Vonage on June 2, alleging the company inappropriately recommended and sold its stock to customers.
-Steven Schwankert, IDG News Service (Beijing Bureau)
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