My Unpaid Shares were Sold!

Posts: 30 · Vonage Forum Junior Joined: May 21, 2006 Posts: 30

I have no idea what to make of this.

Today, I received a SOLD order confirmation for shares I never paid for:

Code:

You Sold 200 at a price of 10.96

Gross Amount $2,192.00
Other Fee .07
Transaction Fee 5.00
-----
Amount $2,186.93
Settlement Date 06/19/2006

Trade Date: 06/14/2006
Symbol: VG
Unsolicited Order
Cash Acct.
HOLD PROCEEDS

We acted as your agent in this transaction.

As a reminder, payment for securities purchased or delivery of securities sold must be deposited with us by the Settlement Date.

I never paid for my shares. I had sent a check to Smith-Barney, then put a stop payment on it because of all the omissions and misrepresentations in the prospectus which led to lawsuits. Just like if you place a bet at a casino and find out that the dealer is cheating and the cards are purposely stacked against you, and you have a chance to pull your bet back off the table, why not pull your bet back if you can.

I didn't instruct them to sell the shares I never bought (although looking at today's drop to 8.68, I'm glad that the worst case scenario is that I'm out at 10.96 instead!)

I've been maintaining a "wait and see" position on this. There's somewhere between 6-10 separate class action lawsuits against Vonage, it's officers, and the underwriters at this time.

Has anyone else who hasn't paid also received a similar sold order confirmation in the mail recently? What are you going to do now?

Posts: 6 · New Forum Member Joined: Jun 06, 2006 Posts: 6

Just checked. UBS sold the ones they say I owned to at 10.96. I guess they wanted to cut their losses before this thing really tanked. Have not heard a thing from them regarding them wanting money. I guess there attorneys have told them they have no legal chance to collect there money so they might as well sell why the stock has value. **** to be them. I hope all the people involved end up in jail for the scam they tried to pull on us.

Posts: 30 · Vonage Forum Junior Joined: May 21, 2006 Posts: 30

I have not received any request for payment, aside from that mass e-mail that Vonage sent shortly after the IPO.

As far as from the SB broker, I haven't received any request at all for payment.

Because this IPO was not on the up-and-up and there were misrepresentations and omissions in the prospectus, I believe it's completely in our right to pull out of the contract and refuse to make payment.

I believe the brokers have realized this, and coupled with the fact that if they were to force us to make payment, we would join each and every class action lawsuit, they would rather cut their losses and take ownership of the losses (or make Vonage pay per the prospectus) at 10.96 per share rather than have more people join the lawsuit, and possibly lose even more money when the stock tanks to pink sheet territory if they lose the lawsuit.

I have not joined any class action lawsuit against Vonage or the underwriters. As long as I don't have to pay for this bogus IPO, I see no reason at this time to change my course.

Posts: 30 · Vonage Forum Junior Joined: May 21, 2006 Posts: 30

After thinking this over, this is my observation of why SB sold the unpaid shares last week at 10.96 without investor notification.

The VG stock is continuing it's downward trend as more and more lawsuits and negative sentiment surround the stock. If Vonage and the underwriters (including SB) lose the lawsuits and investors are "let off the hook" from paying for a bogus IPO, by the time the settlement is reached, the VG stock may be in penny-stock territory.

Locking in the sale of the unpaid shares at last week's 10.96 price prevents them from losing more money if they lose the lawsuits and can't collect payment from investors.

If they win the lawsuits, they'll try and come after the investors of the unpaid shares for the difference of 6.04 per share (17 - 10.96).

The broker-initiated sale of the unpaid shares was a hedge against the uncertainty of the outcome of the lawsuits.

Actually, the fact that the brokers sold the shares at 10.96 last week, instead of "waiting and seeing" what happens, tells me that:

They believe that they will lose some or all of the lawsuits
They believe the stock price will continue to plummet

Posts: 2257 · Posted: Tue Jun 20, 2006 1:10 pm Post subject:

I did not participate in the IPO, so I haven't seen the IPO agreement you received.

However, I have researched a few IPO's before (and simple research into Vonage, their competition, and their business model is what kept me from this IPO. Vonage was and is too risky a venture for my blood).

Anyway, a standard clause in most IPO agreements is that, if you do not pay for the stock in a timely fashion, the holding company will sell the stock at then-market prices, and either refund you the difference if the market price is higher than the IPO price (minus a fee), or you will owe them the difference if the market price is lower than the IPO price.

It would be the same if you bought, say, a house - then decided to default on the mortgage. The bank would sell the house for whatever it could collect, and come after you for the difference. If you decided after the purchase that the house cost too much, or that something was wrong with the house, then refusing to pay the mortgage will just get a bank mad at you. Defaulting doesn't change the fact that you signed a contract to purchase that house, and that you (not the seller) borrowed money, and that you may or may not have been legitimately defrauded (an issue between you and the seller, not you and the bank).

So, in this case, you would legally owe them the difference between the IPO price and what they sold the stock at. You legally owned the stock at the time of IPO, then you defaulted on the loan the holding company offered you for the purchase, so they repossessed and sold the asset for what they could get for it. Now, eventually, they'll probably come after you for the difference.

Whether you choose to pay out on that obligation is a matter between you, the holding company, Vonage, and all the lawyers and collection agencies that may or may not get involved. Most likely, you will receive a dunning letter or phone call from the holding company at some point, then they will turn it over to a collection agency if they don't get their money.

You signed a contract. If you feel that contract is fraudulent, then you need to take action to get it nullified. If you do not take said action, then it is assumed that you are simply not fulfilling your obligations.

I doubt a class action suit will scare them off. Class action suits come out of the woodwork EVERY time a stock IPO's then drops, which is caused by enthusiastic amateurs buying up a stock, desperate to be in the all-important "IPO Set" and blindly assuming that IPO = moneymaker, then the same amateurs learning a hard lesson about concepts such as "risk", "research", "profitabilty" and the fickle finger of fate called "Wall Street" which is so random that the first three don't always apply like you'd think they should.

Class-action lawyers LOVE this kind of thing, because if they can win, they get 20-40% of a HUGE settlement all going to their pocket. It's risky, but it doesn't take a lot of time to file one, and the case doesn't need merits to be filed, only enough angry people who have just lost money to get on board.

Ah, well. Keeps 'em off the streets and out from behind ambulances for a while, anyway. Exhaust fumes from ambulances have to get old eventually, I guess. Wink

Posts: 5 · New Forum Member Joined: Jun 02, 2006 Posts: 5

Same story here. They [SB] dumped mine at 11.90 something (don't have it in front of me) on June 8th....that just goes to show this June 13th 'deadline' to ante up was bogus too. I had sent in my check initially to cover my position, but put a stop-payment on it after I saw all the brown stuff hitting the fan. I just go a letter back a few days ago with my check in it since it was refused by my bank (I guess that stop-payment thing works Smile

So what am I doing? Nothing...just hanging back, watching Cramer take it out on Vonage the Dog. I have not joined any class action suits, since it will be a lot more difficult to go after us individually than as a group. And so far I haven't heard a peep from Vonage. Only the notice from SB that they sold "my" shares with a "Hold Funds" on it. If and when they do come after me, I will put up as many roadblocks as I can.

Posts: 2257 · Posted: Tue Jun 20, 2006 2:29 pm Post subject:

mivoip wrote:

...on June 8th....that just goes to show this June 13th 'deadline' to ante up was bogus too. I had sent in my check initially to cover my position, but put a stop-payment on it...

A bad check (or a stop-payment) will usually trigger the deadline prematurely.

That doesn't mean the date was bogus, it means you indicated to them early that you did not intend to pay. Therefore, they started repossession and liquidation procedures when they got the invalid payment.

That's not unusual. If I bounced a check on a payment, even if the check arrived early, many companies would start collection upon receipt of a bad check (unless, of course, I contacted them and let them know the check was bad, and that a valid replacement was in the mail).

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

Vonage is back up to $9.00 and still climbing. Guess there's so many people out there that hate Verizon, they're buying up Vonage stock just out of spite.