Class-action lawsuits have been filed against six underwriters of GoTo.com Inc., alleging violations of securities law in conjunction with the pay-for-performance search engine company's June 1999 initial public offering.
The lawsuits were filed in U.S. District Court for the Southern District of New York on July 20. The defendants are brokerage firms Salomon Smith Barney, Bear Stearns & Co., BancBoston Robertson Stephens Inc., Credit Suisse First Boston Corp., Lehman Bros. Inc. and Merrill Lynch Inc.
It is unknown how many people make up the class of plaintiffs. The lawsuits said the number of plaintiffs can only be determined through discovery.
The lawsuits allege that the prospectus for GoTo.com's IPO of 6 million shares at $15 each was “materially false and misleading” because it did not disclose that the brokerage firms received commissions from certain investors in exchange for preferential treatment, including allocating the investors additional shares of the restricted stock. This had the effect of driving the price of GoTo.com's stock higher on the market, the suit alleges.
None of the brokerage firms would comment on the lawsuit. No one from GoTo.com was available to comment.
Class-action lawsuits were brought against DoubleClick Inc. in May alleging similar wrongdoing by underwriters of the ad serving firm's IPO in February 1998. That case is still pending.
Both the GoTo.com and DoubleClick lawsuits seek unspecified damages as well as court and lawyers' fees.