Avenue A to Close London Office, Faces Lawsuit Over IPO
The closing will affect 16 people, the company said. Avenue A plans to complete work on its current campaigns with United Kingdom customers during the next several months.
In May, the company began cost-cutting measures in the United States that included a workforce reduction of about 20 percent, or 75 people. It said the cost cutting would be reflected on its second-quarter balance sheet.
Also, the company said it was the subject of several class-action lawsuits concerning its initial public offering in February.
Named in the lawsuit are Avenue A; Morgan Stanley and Salomon Smith Barney, as co-lead underwriters of the company's offering; Avenue A CEO Brian McAndrews; Avenue A chairman Nicolas Hanauer; and Robert Littauer, Avenue A's chief financial officer.
The complaint alleges that Avenue A filed a prospectus with the Securities and Exchange Commission in connection with its February IPO that was "materially false and misleading." The lawsuit alleges that the company failed to disclose that the underwriters had "solicited and received excessive and undisclosed" commissions from certain investors in exchange for certain additional portions of the restricted shares of the public offering.
Avenue A said in a statement that the claims against it are "unfounded and without merit" and that it "plans to vigorously defend against the litigation."