Class Action Lawsuit Commenced Against MP3.Com

By | June 5, 2001 at 12:00 AM

A securities class action lawsuit was filed today in the United States District Court for the Southern District of New York on behalf all persons who acquired, Inc. stock between July 21,1999 and May 16, 2001 known as the “Class Period.”

The complaint also names Credit Suisse First Boston Corporation, and BancBoston Robertson Stevens, as defendants. These firms, referred to as “Underwriter Defendants” were the co-lead underwriters of MP3’s initial public offering of nine million shares of common stock at $28.00 per share.

The complaint charges that the defendants violated the Securities Act of 1933 and the Securities Exchange Act of 1934 by issuing a Prospectus (in connection with MP3’s IPO) that contained materially false and misleading information. The suit also alleges that the underwriters failed to disclose material information, a violation of the Securities Act of 1933.

In recently filed court documents, the complaint alleges that the Prospectus was false and misleading because it failed to disclose that the Underwriter Defendants’ agreement with certain investors (to provide them with significant amounts of restricted MP3 shares in the IPO) came in exchange for exorbitant and undisclosed commissions. Also, the suit says that the agreement between the “Underwriter Defendants” and certain customers whereby the Underwriter Defendants would allocate shares in the IPO to those customers in exchange for the customers’ agreement to purchase MP3 shares in the after-market at pre-determined prices, is a violation of securities law.

The Philadelphia-based Law Offices of Marc S. Henzel is representing the plaintiffs in the case.

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