VA Linux Systems, Inc. - Securities Class Action

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_______________
Copyright (c) 2001
Stanford Law School

VA Linux Systems, Inc. Conclusion: According to the SourceForge Inc.’s (formerly VA Software Corporation) Form 10-K/A for the fiscal year ended July 31, 2007, in December 2006, the appellate court overturned the certification of classes in the six test cases that were selected by the underwriter defendants and plaintiffs in the coordinated proceedings. Because class certification was a condition of the settlement, it was unlikely that the settlement would receive final Court approval. On June 25, 2007, the Court entered an order terminating the proposed settlement based upon a stipulation among the parties to the settlement. Plaintiffs have filed an amended complaint and filed a motion for class certification based on their amended allegations. It is uncertain whether there will be any revised or future settlement.

As summarized by the VA Software Corporation's (formerly VA Linux Systems, Inc.) Form 10-Q for the quarterly period ended January 31, 2006, the Company, two of its former officers (the "Former Officers"), and the lead underwriter in its initial public offering ("IPO") were named as defendants in a consolidated shareholder lawsuit in the United States District Court for the Southern District of New York, captioned In re VA Software Corp. Initial Public Offering Securities Litigation, 01-CV-0242. This is one of a number of actions coordinated for pretrial purposes as In re Initial Public Offering Securities Litigation, 21 MC 92 with the first action filed on January 12, 2001. Plaintiffs in the coordinated proceeding are bringing claims under the federal securities laws against numerous underwriters, companies, and individuals, alleging generally that defendant underwriters engaged in improper and undisclosed activities concerning the allocation of shares in the IPOs of more than 300 companies during late 1998 through 2000. Among other things, the plaintiffs allege that the underwriters' customers had to pay excessive brokerage commissions and purchase additional shares of stock in the aftermarket in order to receive favorable allocations of shares in an IPO. The consolidated amended complaint in the Company's case seeks unspecified damages on behalf of a purported class of purchasers of its common stock between December 9, 1999 and December 6, 2000. Pursuant to a tolling agreement, the individual defendants were dismissed without prejudice. On February 19, 2003, the court denied the Company’s motion to dismiss the claims against it. The litigation is now in discovery. In June 2004, a stipulation of settlement and release of claims against the issuer defendants, including the Company, was submitted to the court for approval. The terms of the settlement if approved, would dismiss and release all claims against the participating defendants (including the Company). In exchange for this dismissal, D&O insurance carriers would agree to guarantee a recovery by the plaintiffs from the underwriter defendants of at least $1 billion, and the issuer defendants would agree to an assignment or surrender to the plaintiffs of certain claims the issuer defendants may have against the underwriters. On August 31, 2005, the court confirmed preliminary approval of the settlement. The proposed settlement remains subject to a number of conditions, including receipt of final approval of the court. If the settlement does not occur, and litigation against the Company continues, the Company believes it has meritorious defenses and intends to defend the case vigorously.

The original complaint alleges VA Linux systems, Inc. violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On 12/09/1999, Linux completed an initial public offering of 4.4 million shares of its common stock at an offering price of $30 per share. In connection with the IPO, Linux filed a registration statement, which incorporated a Prospectus with the SEC. The complaint alleges that the Prospectus was materially false and misleading because it failed to disclose, among other things, that: (I) Credit Suisse had solicited and received excessive and undisclosed commissions from certain investors in exchange for which Credit Suisse allocated to those investors material portions of the restricted number of Linux shares issued in connection with the Linux IPO; and (ii) Credit Suisse had entered into agreements with customers in which Credit Suisse agreed to allocate Linux shares to those customers in the Linux IPO in exchange for which the customers agreed to purchase additional Linux shares in the aftermarket at pre-determined prices.

INDUSTRY CLASSIFICATION:
SIC Code: 3571
Sector: Technology
Industry: Computer Hardware

COMPANY/ISSUER NAME:	VA Linux Systems, Inc.
COMPANY/ISSUER TICKER:	LNUX
COMPANY WEBSITE:	http://www.valinux.com

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Alexander Makaron, et al. v. VA Linux Systems, Inc., et al.

COURT: S.D. New York	DOCKET NUMBER: 01-CV-00242
JUDGE NAME: Hon. Miriam Goldman Cedarbaum
DATE FILED: 01/11/2001	SOURCE: Business Wires
CLASS PERIOD START: 12/09/1999	CLASS PERIOD END: 12/06/2000
TYPE OF COMPLAINT: Unamended/Unconsolidated
PLAINTIFF FIRMS IN THIS OR SIMILAR CASE:
Emerson Poynter LLP 2228 Cottondale Avenue, Suite 100, Little Rock, AR, 72202 (voice) 800.663.9817, (fax) 501.907.2556, epllp@emersonpoynter.com Law Offices of Charles J. Piven, P.A. World Trade Center-Baltimore,401 East Pratt Suite 2525, Baltimore, MD, 21202 (voice) 410.332.0030, (fax) , pivenlaw@erols.com Law Offices of Marc S. Henzel 335 Central Avenue, Lawrence, NY, 11559 (voice) 516.374.0707, (fax) 516.295.3473, securitiesfraud@comcast.net Lovell Stewart Halebian LLP 500 Fifth Avenue, New York, NY, 10110 (voice) 212.608.1900, (fax) 212.719.4677, info@lshllp.com Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA) 600 West Broadway, 1800 One America Plaza, San Diego, CA, 92101 (voice) 800.449.4900, (fax) , support@milberg.com Seeger Weiss LLP (New York Old Address) 40 Wall Street. The Trump Building, New York, NY, 10005 (voice) 212.584.0700, (fax) , info@seegerweiss.com Stull, Stull & Brody (New York) 6 East 45th Street, New York, NY, 10017 (voice) 310.209.2468, (fax) 310.209.2087, SSBNY@aol.com Wechsler Harwood LLP 488 Madison Avenue 8th Floor, New York, NY, 10022 (voice) 212.935.7400, (fax) , info@whhf.com Wolf Haldenstein Adler Freeman & Herz LLP 270 Madison Avenue, New York, NY, 10016 (voice) 212.545.4600, (fax) 212.686.0114, newyork@whafh.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 9

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Class Action Complaint For Violation of the Federal Securities Laws
Type: Complaint		Date on the document: 01/11/2001

REFERENCE COMPLAINT

In Re VA Software Corp. (f/k/a Va Linux Systems, Inc.) Initial Public Offering Securities Litigation

COURT: S.D. New York	DOCKET NUMBER: 01-CV-00242
JUDGE NAME: Hon. Shira A. Scheindlin
DATE FILED: 04/19/2002	SOURCE: Business Wires
CLASS PERIOD START: 12/09/1999	CLASS PERIOD END: 12/06/2000
TYPE OF COMPLAINT: Consolidated and/or Amended
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Bernstein Liebhard & Lifshitz LLP (New York, NY) 10 E. 40th Street, 22nd Floor, New York, NY, 10016 (voice) 800.217.1522, (fax) , info@bernlieb.com Milberg Weiss Bershad Hynes & Lerach LLP (New York, NY) One Pennsylvania Plaza, New York, NY, 10119-1065 (voice) 212.594.5300, (fax) , Schiffrin & Barroway LLP 3 Bala Plaza E, Bala Cynwyd, PA, 19004 (voice) 610.667.7706, (fax) 610.667.7056, info@sbclasslaw.com Sirota & Sirota LLP 110 Wall Street 21st Floor, New York, NY, 10005 (voice) 888.759.2990, (fax) 212.425.9093, Info@SirotaLaw.com Stull, Stull & Brody (New York) 6 East 45th Street, New York, NY, 10017 (voice) 310.209.2468, (fax) 310.209.2087, SSBNY@aol.com Wolf Haldenstein Adler Freeman & Herz LLP 270 Madison Avenue, New York, NY, 10016 (voice) 212.545.4600, (fax) 212.686.0114, newyork@whafh.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 6

DOCUMENTS FOR THE REFERENCE COMPLAINT
Consolidated Amended Class Action Complaint For Violations Of The Federal Securities Laws
Type: Complaint		Date on the document: 04/19/2002
U.S. District Court Civil Docket
Type: Docket		Date on the document: 10/13/2004
U.S. District Court Civil Docket
Type: Docket		Date on the document: 11/14/2007

OTHER DOCUMENTS

Case Name and/or Number:
Type:		Date on the document:

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