Sunday, June 04, 2006

WSJ.com - Vonage Faces Lawsuit Over IPO

WSJ.com - Vonage Faces Lawsuit Over IPO: "The suit, filed in U.S. District Court in New Jersey, claims Vonage tried to compensate for a lack of interest among sophisticated institutional investors who usually dominate IPO's by selling shares to consumers, according to the statement. The suit contends that Vonage and its underwriters violated a securities law that 'requires that a company recommending the purchase or sale of its securities to a customer must have a reasonable basis for believing that the recommendation is suitable for the customer,' the statement said. Vonage, 'had no such reasonable basis in this case and improperly crammed investors into the Vonage IPO regardless of their suitability,' according to the statement."

It's difficult to feel sorry for Vonage customers/investors who apparently thought "friends and family" status meant risk-free access to easy profits; Vonage certainly wasn't hiding its financial performance or projections.

No comments: