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Vonage IPO Leads to Class Action Lawsuit

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At a glance:

Investors in the recent Vonage IPO have filed a class action lawsuit against the company after the shares dived 30% in their first week. 
 
A "false and misleading" Registration and Prospectus is alleged, which would be a violation of Federal Securities Law. 
 
It was further alleged that the tactic of offering some IPO shares to customers was actually a way of filling out the IPO since professional investors might be reluctant to invest in the company, and thus a violation of securities law as well. 
 
The suit requests damages for those who lost money. 
 

BULLETIN: Vonage hit with class-action shareholder lawsuit

ZDNet - 6/2/2006 11:30 PM

Law firm Motley Rice LLC said this evening it has filed a class action lawsuit in the United States District Court for the District of New Jersey on behalf of purchasers of the common stock of Vonage Holdings Corp.
 
The law firm issued a press release that accused Vonage of publishing a "false and misleading" Registrtion and Prospectus, an alleged infraction that has Motley Rice convinced that resulted in a 30 percent decline in the stock price since the stock went on sale, and the disillusionment of customers who were afforded he opportunity to purchase Vonage stock at $17 a share as part of the Directed Share Program
 
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