NEW YORK--(BUSINESS WIRE)--June 12, 2001--The following is an
announcement by Stull, Stull & Brody:
Notice is hereby given that a class action lawsuit was filed on
June 12, 2001, in the United States District Court for the Southern
District of New York, on behalf of purchasers of VerticalNet, Inc.
("VerticalNet") (NASDAQ:VERT.Q) common stock between February 11, 1999
and June 8, 2001, inclusive (the "Class Period").
The complaint alleges that defendants VerticalNet, Inc., Gene S.
Godick, Mark L. Walsh, Michael J. Hagan, Douglas A. Alexander, Jeffrey
C. Ballowe, Walter W. Buckley, III and Matthew J. Warta violated the
federal securities laws by issuing and selling VerticalNet common
stock pursuant to the February 11, 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, joint lead underwriters Lehman Brothers, Inc., Hambrecht
& Quist LLC, Volpe Brown Whelan & Company, LLC and Wit Capital
Corporation allocated VerticalNet shares to customers at the IPO price
of $16.00 per share. To receive the allocations (i.e., the ability to
purchase shares) at $16.00, 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
VerticalNet stock rocketed upward (a practice known on Wall Street as
"laddering") was intended to (and did) drive VerticalNet'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 $16.00 IPO price and
then selling it later for a profit at inflated aftermarket prices,
which rose as high as over $138 a little over one year after the IPO.
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 VerticalNet 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 VerticalNet between February 11,
1999 and June 8, 2001, you may, no later than 60 days from June 12,
2001, request the Court appoint you as lead plaintiff.
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. |
