NEW YORK--(BUSINESS WIRE
--Notice is hereby given that a class action lawsuit was filed on July 18, 2001, in the United States District Court for the Southern District of New York, on behalf of purchasers of Chinadotcom Corporation ("Chinadotcom") (NASDAQ:CHINA) common stock between July 12, 1999 and June 28, 2001, inclusive (the "Class Period").
The complaint alleges that defendants violated the federal securities laws by issuing and selling Chinadotcom common stock pursuant to the July 12, 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, members of the underwriting group allocated Chinadotcom shares to customers at the IPO price of $20.00 per share. To receive the allocations (i.e., the ability to purchase shares) at $20.00, 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 Chinadotcom stock rocketed upward (a practice known on Wall Street as "laddering") was intended to (and did) drive Chinadotcom'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 $20.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $67-7/64 on July 13, 1999, more than tripling on its first day of trading.
--Notice is hereby given that a class action lawsuit was filed on July 18, 2001, in the United States District Court for the Southern District of New York, on behalf of purchasers of Chinadotcom Corporation ("Chinadotcom") (NASDAQ:CHINA) common stock between July 12, 1999 and June 28, 2001, inclusive (the "Class Period").
The complaint alleges that defendants violated the federal securities laws by issuing and selling Chinadotcom common stock pursuant to the July 12, 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, members of the underwriting group allocated Chinadotcom shares to customers at the IPO price of $20.00 per share. To receive the allocations (i.e., the ability to purchase shares) at $20.00, 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 Chinadotcom stock rocketed upward (a practice known on Wall Street as "laddering") was intended to (and did) drive Chinadotcom'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 $20.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $67-7/64 on July 13, 1999, more than tripling on its first day of trading.
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