Breaking News - My Stock Was Bought Out

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

Reading more of the latest lawsuit, it looks like it goes further than just the Vonage customers who bought stock through the IPO. This one looks like it wants to have ANYONE who bought Vonage stock (either pre-IPO, or through normal brokerage account channels). These lawyers are claiming the stock tanked due to the items they have listed in the lawsuit, including the part about the Vonage customers who refused to pay for their shares. So if this lawsuit goes through, you might as well write off Vonage. They would essentially have to refund the millions of dollars they received in the IPO back to the investors who purchased the stock. They do that, bankruptcy will soon follow.

Posts: 62 · Full Forum Member Joined: Apr 29, 2005 Posts: 62

rudedog40 wrote:

Reading more of the latest lawsuit, it looks like it goes further than just the Vonage customers who bought stock through the IPO. This one looks like it wants to have ANYONE who bought Vonage stock (either pre-IPO, or through normal brokerage account channels). These lawyers are claiming the stock tanked due to the items they have listed in the lawsuit, including the part about the Vonage customers who refused to pay for their shares. So if this lawsuit goes through, you might as well write off Vonage. They would essentially have to refund the millions of dollars they received in the IPO back to the investors who purchased the stock. They do that, bankruptcy will soon follow.

I do think that there is no question as to the future of Vonage. This company, due to the splendid work of upper management, and the aid of the Investment banks, have guaranteed an end to this company within the next 12 months. The money Vonage is going to have to spend to defend lawsuits and make good on this IPO will evaporate a great deal of the proceeds of the IPO.

Now, looking back, it would have been way easier to offer the IPO at a more reasonable price per share than to offer it at $17, deal with customers who will not pay, and defend the company against a host of litigation that is soon to follow. I did not lose money on this trade, I got my shares written off, but I will certainly join a class action suit if it includes folks other than who were wronged by the IPO. I feel very sorry for the folks that did lose money on this. They lost money because they believed in the company and it turned around and screwed them.

It will be interesting to see in the next 2-4 months to see what pans out with the non payment of shares and any lawsuits coming in Vonage's direction. I will also be curious to see if the fall in the stock price was due to naked short selling, possibly by the same exact banks that underwrote the deal. Investment Banking has always been about firm reputation, where the reputation of the bank is put on the line. The reputation of these three investment banks most certainly will take a hit. I encourage everyone here to close any and all accounts you have open with Smith Barney and the others, as I feel these firms totally went around the Vonage customers backs.

Lots of folks here like to say that this is all a big game and you lose some and you win some, but when there are so many unknown things that might have gone on with this issue (for example, naked short selling by the issuing houses), the playing field is not level, and it is not as easy as just saying that it was a losing trade. Passing the whole thing off just as a bad trade "oh well" is failing to recognize the countless deceptive acts of both Vonage and the issuing banks. A big step in the evaluation of this will be the result of the NYSE probe of naked short selling on the issuing day.

I am not in an area where I have a telco/cable co that offers Voip service, but when they do, I will certainly switch from Vonage to them, as I feel that Vonage knowingly went behind the customers backs and put the interests of upper management in front of interest in what makes the company tick, the customers. You can disagree if you like, but all the facts reported so far indicate that the banks highballed the ipo price, and that the IPO was nothing else but an exit method for the venture capital investors.

Posts: 11 · Vonage Forum Associate Joined: Jul 19, 2005 Posts: 11

How exactly were you notified that your stock was bought out? Do tell, please. Very Happy

Posts: 62 · Full Forum Member Joined: Apr 29, 2005 Posts: 62

hbmorty wrote:

How exactly were you notified that your stock was bought out? Do tell, please. Very Happy

I called Smith Barney returning a message they left about my failure to pay. I called and they told me my shares were bought out and it will be left at that.

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

Smith barney sold the shares on 6-June at $11.99. I came to know about it when I got the statement in mail on 11-June. As of now there is no communication from SSB or VG if I owe anything to SSB or VG.

Posts: 19 · Vonage Forum Associate Joined: May 22, 2006 Posts: 19

If this is true this is going to be a BIG problem. The people that paid(including me) are going to be pissed. We need to confirm that this is all true. I'm not saying that ckudrna is lying but it would not be inconceivable to guess that you may have been told incorrect info. We need to see how this all plays out.

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

So you're saying that SB and Vonage knowingly and maliciously knew this stock would tank from the onset? Why would they want to do this, especially since the SEC is srutinizing any major transaction a company takes these days. How do you determine whether a stock is overpriced? It clearly stated in the prospectus the stock would IPO between $16 - $18. Why wouldn't the powers that be red flag this amount and stop the IPO before it opened? Everyone that purchased the stock knew it would come out in this range. There was bad press about this IPO before it became public. Yet you and 10,000 others went ahead and bought the stock anyway. If you didn't think it was worth $17, why did you buy into it? What made you believe, or where did you get your information, that this stock was going to take off? Why would investment banks and others sell the stock short, knowing well that with today's technology and SEC laws (post -Enron) they would probably get caught?

If you've been refunded all your money as you say you have, why should you be allowed to join a class action lawsuit? What have you lost but time? The only individuals who have a right to sue, if they even have a viable reason, are the one's who lost money on the stock.

Posts: 20 · Vonage Forum Associate Joined: May 31, 2006 Posts: 20

gomo wrote:

If this is true this is going to be a BIG problem. The people that paid(including me) are going to be pissed.

I guess I would be annoyed, but it's hard to be pissed. I can't
remember a time I was ever this entertained by a market
transaction. This just goes on and on -- you couldn't make
it up.

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

'Naked' short selling is center of looming legal battle
Companies on the defensive seize upon an aggressive form of shorting
E-mail | Print | | Disable live quotes By Alistair Barr, MarketWatch
Last Update: 1:00 AM ET Jun 14, 2006

SAN FRANCISCO (MarketWatch) -- For years, companies have accused short sellers of manipulating their shares and spreading false information, but rarely have their allegations gone anywhere in court.

Now, after seeking out a more effective basis to make their case, a growing number of companies and class-action attorneys have seized upon a particularly aggressive -- and often illegal -- form of short selling called naked shorting.
Like mainstream short strategies, naked shorting is also a way to bet on a stock dropping -- only it's easier to think of it as shorting on steroids.
In a typical short sale, traders sell borrowed shares and then -- if all goes according to plan - buy them back at a lower price and return them to the lender. The difference is kept as profit.
In naked shorting, a trader shorts a stock without first making necessary arrangements to borrow shares. That often means the seller often fails to deliver the stock to the buyer and the trade can't be settled, running afoul of securities laws.
By one contentious estimate, it's a big problem plaguing more than 10% of stocks on the New York Stock Exchange and Nasdaq. An NYSE probe into whether naked shorting was used to force down shares of Vonage Holdings Corp. lower during the Internet phone company's May initial public offering has added fuel to the fire.

Because naked short selling involves the violation of technical trading rules, it could be easier to prove than more broadly based accusations like manipulation or conspiracy.
"It's very hard to prove manipulation," said lawyer Barry Barbash, formerly a senior official with the Securities and Exchange Commission. "That pattern of behavior by short sellers has rarely, if ever, been proved in any legal case. It's been alleged and asserted over and over again by companies, but not proved."
"There are a group of bad guys rigging the market by selling tens of millions of shares everyday that they don't own and never deliver."
— Wes Christian, securities lawyer
"There have been instances of enforcement cases against short-selling hedge funds, but these focus on more technical violations of trading rules," he added. Barbash, a partner at the law firm of Willkie Farr & Gallagher LLP, represents both companies and fund managers on either side of the issue and said he doesn't have opinions on specific cases.
James Angel, associate professor of finance at Georgetown University, said some hedge fund managers have already been charged by the SEC and the National Association of Securities Dealers with violations related to naked shorting.
If companies can gather evidence charting a pattern of rule-breaking by short sellers, then judges and juries could be more open to hearing about other allegations such as manipulation, he explained.
"It would certainly look bad if companies point to these guys and show they have a predilection for breaking rules," Angel said. "Whether a judge and jury buy that in court is another story."
Angel said the legal strategy could end up producing more settlements between companies and short sellers.
Law firms unite
Three class-action law firms, headed by John O'Quinn, are leading the legal push against short sellers and naked short selling.
O'Quinn, who achieved fame for winning big lawsuits against tobacco companies in the 1990's, is joined by two other Houston-based firms, Christian, Smith & Jewell and Heard, Robins, Cloud, Lubel & Greenwood.
The firms are also representing Overstock.com (OSTK : overstock com inc del com
So far, these law firms have spent $25 million on the way toward filing 12 suits involving 10 companies, and they're close to filing another five cases. Ten more suits are in the works and the total may reach 50 by early 2007.
The thrust of their complaints is that naked short selling creates billions of dollars of shares that don't actually exist. Individual investors may unknowingly purchase these "phantom" stocks, undermining the legitimacy of the market.
"There are a group of bad guys rigging the market by selling tens of millions of shares everyday that they don't own and never deliver," lawyer Wes Christian, a partner at Christian, Smith & Jewell, said. "A result of that is that shares of our clients are being artificially devalued."
"We're going to ultimately shed light on this bad behavior," Christian added. "This is killing young Corporate America, costing jobs and cheating people out of hundreds of millions of dollars with fake shares."
Undelivered
There are currently about half a billion shares in the U.S. that have been sold in the past but not delivered for settlement in the required three days, according to Robert Shapiro, a former undersecretary in the Commerce Department under President Bill Clinton, who's researching the issue as a paid consultant for O'Quinn's group.
These so-called fails-to-deliver trades can go on for a long time, and Shapiro estimates that roughly 12% of NYSE and Nasdaq stocks have fails-to-deliver that are at least two months old.

Posts: 62 · Full Forum Member Joined: Apr 29, 2005 Posts: 62

gomo wrote:

If this is true this is going to be a BIG problem. The people that paid(including me) are going to be pissed. We need to confirm that this is all true. I'm not saying that ckudrna is lying but it would not be inconceivable to guess that you may have been told incorrect info. We need to see how this all plays out.

I remember being on here with a host of other people informing all of you to not pay. The whole thing was flawed from the get go. I have zero trust in SB and VG at this point. All any of us got back was talk about how we are bad people because we didnt pay and blah blah.