Errors and Omissions

Vonage lawsuit firm makes a math error

Business Week's Deal Flow blog (via the NY Times' Dealbook) reported today that Motley Rice, a firm leading a class-action case against the recent Vonage IPO, made a major blunder in their filing. They claim that the financial advisors (Citibank and others) claimed an exorbitant 17% of the IPO proceeds for their services. The claim was printed in bold and italicized, as follows:


Investors were willing to and did pay these large underwriting fees -- that accounted for 17% of the purchase price of the shares sold in the Offering -- and did not question the millions of dollars in additional compensation realized by the affiliate of defendant Citigroup in connection with the Offering, because investors believed that such fees were being paid, in substantial part, to assure that the underwriters had conducted a thorough analysis of the transaction -- commonly referred to as a “due diligence” investigation.


The correct percentage was a standard 7%. The culprit? Everyone's favorite scapegoat, the typo. I guess they're too ashamed to admit to an arithmetic error, especially one that passed through Motley Rice's own "due diligence." Why didn't the partner who reviewed the document (and who likely ordered the bolding of the charge) fess up to his/her mistake?

I'm starting to warm up to lawsuit reform.

errors, IPO, legal

posted by Unknown @ 6/06/2006 04:25:00 PM