Kahn Gauthier Swick, LLC hereby gives notice that 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. ("Vonage" or the "Company") (NYSE: VG). If you would like to discuss this action or have any questions about this notice or your rights, please contact us via telephone at (866) 467-1400. |
Any member of the purported class may move the court to serve as lead plaintiff through counsel of his or her choice or may choose to do nothing and remain an absent class member. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. To serve as lead plaintiff, you must meet certain legal requirements. If you wish to serve as lead plaintiff, you must move the court no later than August 1, 2006 for appointment. Your ability to share in any recovery is not affected by the decision whether to serve as lead plaintiff. We would be happy to answer any questions you may have about your options.
The Complaint alleges the Company and certain named officers and underwriters violated the federal securities laws by publishing a materially false and misleading joint Registration Statement and Proxy-Prospectus (the "Prospectus"). The Company provides broadband telephone services in the United States, Canada, and the United Kingdom, primarily using voice over Internet protocol technology. Prior to the Company's Initial Public Offering ("IPO") on May 24, 2006, the Company had spent hundreds of millions of dollars to market its services to potential customers. However, the Complaint alleges, both the Company and Company insiders, who had invested hundreds of millions of dollars of their personal funds in the Company, were losing money. According to the Complaint, these Company insiders, desperate to execute an exit strategy for themselves, embarked on an illegal course of conduct to sell shares of the Company in a public market.
The Complaint further alleges that, Defendants, realizing that institutional investors who normally buy in IPOs would be reluctant at best to purchase Vonage shares as-priced, pre-sold at least 13.5% of the Company's IPO shares to Company customers in violation of NASD Rule 2310. NASD Rule 2310 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 Complaint also alleges Defendants had no such reasonable basis in this case and improperly crammed investors into the Vonage IPO regardless of their suitability.
The Complaint also contends that the Underwriter Defendants violated the securities laws because they allowed this illegal and improper action to continue. The Underwriter Defendants, the Plaintiff claims, had an obligation to ensure that Vonage had complied with NASD Rule 2310 in setting up and administering the accounts of customers purchasing in the IPO. According to the Complaint, however, the Underwriter Defendants had little or no incentive to ensure that customer participants in the IPO were suitable. Instead, the Complaint also alleges they were motivated by the tens of millions of dollars in fees they would receive from a successful IPO. Furthermore, according to the Complaint, Vonage had agreed to indemnify the Underwriter Defendants against certain liabilities relating to the customer pre-sale program; among those liabilities was the foreseeable possibility that customers who purchased in the IPO would refuse or fail to pay for the common stock allocated to them in the pre-sale.
As a result of this alleged illegal conduct, shares of Vonage sold in the IPO declined more than 30% in the first seven trading days. The decline in value of these shares has been substantially exacerbated by many Vonage customers who participated in the pre-sale now refusing to pay for their shares.
If you bought Vonage Holdings Corporation securities and would like to obtain information about the Vonage Holdings Corporation lawsuit, then you are invited to call (866) 467-1400 to speak with an attorney.