MINNEAPOLIS, June 30, 2006 (PRIMEZONE) -- Lockridge Grindal Nauen P.L.L.P. announces that a class action lawsuit was filed in the United States District Court for the District of New Jersey, on behalf of all purchasers of the common stock of Vonage Holdings Corporation ("Vonage" or the "Company") (NYSE:VG) who purchased or otherwise acquired Vonage common stock pursuant to or traceable to the Company's May 24, 2006 Initial Public Offering (the "Class").
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"). Prior to the Company's Initial Public Offering ("IPO"), 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 were losing money, and these 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 pre-sold at least 13.5% of the Company's IPO shares to Company customers in violation of NASD Rule 2310, which 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 alleges Defendants had no such reasonable basis and improperly crammed investors into the Vonage IPO regardless of their suitability. 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 exacerbated by many Vonage customers who participated in the pre-sale but are now refusing to pay for their shares.
Plaintiffs' counsel, Lockridge Grindal Nauen P.L.L.P., has extensive experience representing shareholders in class actions and has successfully recovered billions of dollars for defrauded investors and shareholders. The reputation and expertise of the firm in shareholder and other class action litigation have been repeatedly recognized by courts, which have appointed the firm to major positions in complex multi-district and consolidated litigations. The firm has offices in Minneapolis and Washington, D.C.
If you are a member of the class, you may, no later than August 1, 2006, move the Court to serve as lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. Your ability to share in any recovery is not, however, affected by your decision whether to serve as lead plaintiff.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca
If you have questions about the lawsuit or would like to discuss it with an attorney, please call or e-mail:
Karen H. Riebel, Esq. (khriebel@locklaw.com) Lockridge Grindal Nauen P.L.L.P. 100 Washington Avenue South, Suite 2200 Minneapolis, MN 55401 (612) 339-6900