Class Action Suit Filed

Posts: 12 · Vonage Forum Associate Joined: Jun 01, 2006 Posts: 12

Today, the FOURTH lawsuit has been flied against Vonage Holdings. I know that the first three were all filed in the U.S. District Court of New Jersey. I am not sure where the fourth one was filed, but likely the same. It is likely that the cases will all be joined.

Posts: 29 · Vonage Forum Junior Joined: May 30, 2006 Posts: 29

Securities Class Action Filed Against Vonage, Inc. -- Institutional Investors Encouraged to Contact KGS

Last Update: 4:58 PM ET Jun 7, 2006

NEW ORLEANS, LA, Jun 07, 2006 (MARKET WIRE via COMTEX) -- Kahn Gauthier Swick, LLC (KGS) 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") (VG : Vonage hldgs corp com
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4:36pm 06/07/2006

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VG11.99, -0.11, -0.9%) . KGS encourages all institutional investors, money managers or large individual investors that have suffered a loss related to their investments in Vonage, to seek counsel.
IF YOU ARE AN INSTITUTIONAL INVESTOR OR IF YOU HAVE SUFFERED A SIGNIFICANT LOSS RELATED TO YOUR INVESTMENT IN Vonage, YOU ARE ENCOURAGED TO CONTACT KGS IMMEDIATELY AT 1-866-467-1400, ext. 100.
The complaint filed by KGS 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 in connection with its May 24, 2006 Initial Public Offering. Specifically, the complaint alleges that defendants failed to ensure that IPO shares distributed to their retail customers were done so in compliance with SEC and Exchange rules. According to the complaint, defendants violated these rules to create artificial demand for their IPO, after they realized that interest in the Vonage Offering was low among institutional investors. The complaint also charges that, because the Company had indemnified underwriters against the risk that Vonage customers would not pay for their IPO shares, that the underwriters who were responsible for distributing the shares and maintaining the Vonage customer accounts, also failed to conduct a proper due diligence investigation in connection with the Vonage IPO. Thus, as a result of many inexperienced and unsuitable investors being improperly allocated significant numbers of shares in the IPO, and because of other problems related thereto, once sold, Vonage shares 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 now refusing to pay for their shares.
KGS has represented institutions and large investors in diverse actions and has significant experience in securities class action contingent-fee litigation. KGS encourages any fund managers or large investors who suffered losses as a result of their investment in Vonage to contact Lewis Kahn of KGS toll free 1-866-467-1400, ext. 100, or at 504-648-1850, or by email at lewis.kahn@kglg.com. Further information may also be found at http://www.kglg.com/case/case.asp?lngCaseId=4830.

Reading the information above, this lawsuit appears baseless, and sounds like nothing more than a lawyer who doesn't know the theories behind an IPO buy. Probably one of the whiners that's been posting here thinking he got ripped off because his stocks didn't double the first day.

Posts: 7 · New Forum Member Joined: May 31, 2006 Posts: 7

rudedog40 wrote:

Securities Class Action Filed Against Vonage, Inc. -- Institutional Investors Encouraged to Contact KGS

Reading the information above, this lawsuit appears baseless, and sounds like nothing more than a lawyer who doesn't know the theories behind an IPO buy. Probably one of the whiners that's been posting here thinking he got ripped off because his stocks didn't double the first day.

Many folks would be fine with this IPO, had it stayed flat or at least 90%+ of IPO price. The way it fell, it is obvious it was mispriced..

Posts: 13 · Vonage Forum Associate Joined: Jan 17, 2006 Posts: 13

pcapelli wrote:

BMoore wrote:

I believed in this company to price their stock accordingly... the stock was to reward their loyal customers and unfortunately, they just upset 10,000 of their most loyal customers.

I hope this works out.

The purpose of an IPO is *not* to reward the company's loyal customers. It is to raise cash for the company. Period.

The prospectus, and the vonageipo site, repeatedly warned that the company never made money; would not make money for the forseeable future; and may never make money. Additionally, it warned that Management, the Board, and the Underwriters explicity recommended against the purchase of Vonage shares.

They could not have been more specific in their warnings. The only thing this lawsuit does is drive down the value of Vonage shares even more, and cause it to spend IPO investor money on lawyers to defend itself.

"Specifically, the lawsuit claims this pre-IPO share sale violated NASD Rule 2310, which requires that a company recommending the purchase of its shares to a customer "must have a reasonable basis for believing that the recommendation is suitable for the customer."

The lawsuit alleges Vonage and its associated had no such reasonable basis "and improperly crammed investors into the Vonage IPO regardless of their suitability."

http://www.cbronline.com/article_news.asp?guid=50B29DFC-DA40-4A81-A88B-0216E13E8FAA

Posts: 7 · New Forum Member Joined: Jan 30, 2005 Posts: 7

manse wrote:

"Specifically, the lawsuit claims this pre-IPO share sale violated NASD Rule 2310, which requires that a company recommending the purchase of its shares to a customer "must have a reasonable basis for believing that the recommendation is suitable for the customer."

The lawsuit alleges Vonage and its associated had no such reasonable basis "and improperly crammed investors into the Vonage IPO regardless of their suitability."

Yet, on the vonageipo www site, you had to click through repeated warnings about the IPO, including the statement that neither Vonage's Board, nor it's Management, recommended the purchase of Vonage shares.

As to being 'crammed' into the Vonage IPO, please explain how that happened to any investor. Was a gun held to their head? Service disconnection threatened? No.

Posts: 33 · Vonage Forum Junior Joined: Jun 01, 2006 Posts: 33

No one was "crammed.' Obviously we participated with our own free will. The problem is that the rules were not followed and it was impossible for people to sell shares once the market opened.

First, my screen said I was allocated zero. I never rechecked.
Second, no one sent an email to me indicating tht the offering as priced to let me then decide whether I wanted to participate
Third, the terms and conditions clearly state three important facts. 1. All disputes will be handled by an arbitrator. 2. If you decide NOT to pay for the shares, they will be reallocated. 3. you must read all prospectus and amendments (I never read the amendments) since they were filed almost immediately before the IPO was priced.

I was waiting for my confirmation email and never got one.

So thats where the issues are and Vonage will have to sue me for the money and, if after we go to court, and I lose. I will not only pay but I will cancel my service. so its a lose-lose for VG.

Posts: 243 · Vonage Forum Master Joined: Jan 18, 2004 Posts: 243

They will sue you and they don't care if they lose you as a customer. You don't live up to your commitments so why keep you around? You can go cheat some other company.

I can't belive how easily you admit you screwed up and didn't read or do as you were instructed in this IPO process.

Posts: 33 · Vonage Forum Junior Joined: Jun 01, 2006 Posts: 33

you have it all backwards. they cannot sue me (must be arbitration). and 2. why keep me around? Because according to their valuation.. Im worth about $1700 to them.

Posts: 7 · New Forum Member Joined: Jan 30, 2005 Posts: 7

audiotron wrote:

So thats where the issues are and Vonage will have to sue me for the money and, if after we go to court, and I lose. I will not only pay but I will cancel my service. so its a lose-lose for VG.

I thought you said you'd go to arbitration. If the mediator decides you should pay, would you?

I agree that there were issues with the offering, perhaps, but then your beef is with the underwriters, not Vonage.

Posts: 243 · Vonage Forum Master Joined: Jan 18, 2004 Posts: 243

audiotron wrote:

No one was "crammed.' Obviously we participated with our own free will. The problem is that the rules were not followed and it was impossible for people to sell shares once the market opened.

First, my screen said I was allocated zero. I never rechecked.
Second, no one sent an email to me indicating tht the offering as priced to let me then decide whether I wanted to participate
Third, the terms and conditions clearly state three important facts. 1. All disputes will be handled by an arbitrator. 2. If you decide NOT to pay for the shares, they will be reallocated. 3. you must read all prospectus and amendments (I never read the amendments) since they were filed almost immediately before the IPO was priced.

I was waiting for my confirmation email and never got one.

So thats where the issues are and Vonage will have to sue me for the money and, if after we go to court, and I lose. I will not only pay but I will cancel my service. so its a lose-lose for VG.

Audiotron lets look at your points individually.

You said "The problem is that the rules were not followed and it was impossible for people to sell shares once the market opened."

What proof do you have? All you had to do was call your broker and place your order. If you placed an order and it wasn't executed. Then your issue is with the broker.

Your said "First, my screen said I was allocated zero. I never rechecked."

Well whos fault is it that you didn't recheck? Yours.

You said "Second, no one sent an email to me indicating that the offering as priced to let me then decide whether I wanted to participate"

The website clearly stated that all information would be posted to the website and you had to acknowledge that no other types of notices though possible would not be guaranteed.

You said "Third, the terms and conditions clearly state three important facts. 1. All disputes will be handled by an arbitrator."

True statement arbitration is the first step in settling disputes. A possible result of arbitration could be legal action.

You said " 2. If you decide NOT to pay for the shares, they will be reallocated."

Wrong nowhere does it say that "If you decide NOT to pay for shares, the will be reallocated" The terms state that the underwriters will not be held liable for shares that are not paid for or returned. Liability still remains with the individual investor.

You said "3. you must read all prospectus and amendments (I never read the amendments) since they were filed almost immediately before the IPO was priced."

Again, whos fault is it that you didn't do what you were instructed to do?

Arbitration will be in your future and I can assure you that there will be a quick decision not in your favor. My advice is to consult with an attorney to formulate your strategy after arbitration has concluded.
I was waiting for my confirmation email and never got one.

So thats where the issues are and Vonage will have to sue me for the money and, if after we go to court, and I lose. I will not only pay but I will cancel my service. so its a lose-lose for VG.