Flashnet Communications, Inc. - Securities Class Action

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_______________
Copyright (c) 2001
Stanford Law School

Flashnet Communications, Inc. Conclusion: Other actions have been filed making similar allegations regarding the IPOs of more than 300 other companies. All of these have been coordinated for pretrial purposes as In re Initial Public Offering Securities Litigation, Civil Action No. 21-MC-92.

According to a Press Release dated November 28, 2001, the complaint alleges that Flashnet and certain of its officers and directors at the time of its IPO violated the federal securities laws by issuing and selling Flashnet common stock pursuant to the initial public offering without disclosing to investors that several of the underwriters of the IPO had solicited and received excessive and undisclosed commissions from certain investors. In exchange for the excessive commissions, the complaint alleges, defendants FleetBoston Robertson Stephens, Inc., UBS PaineWebber, Inc., and First Union Securities, Inc. allocated Flashnet shares to customers at the IPO price of $17.00 per share. To receive the allocations (i.e., the ability to purchase shares) at $17.00, the defendant underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of Flashnet stock rocketed upward (a practice known on Wall Street as "laddering") was intended to (and did) drive Flashnet's share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the defendant underwriters and their customers to reap enormous profits by buying Flashnet stock at the $17.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $46.00 during its first day of trading.

Rather than allowing their customers to keep their profits from the IPO, the complaint alleges, the defendant underwriters required their customers to "kick back" some of their profits in the form of secret commissions. These secret commission payments were sometimes calculated after the fact based on how much profit each investor had made from his or her IPO stock allocation. The complaint further alleges that defendants violated the Securities Act of 1933 because the Prospectus distributed to investors and the Registration Statement filed with the SEC in order to gain regulatory approval for the Flashnet offering contained material misstatements regarding the commissions that the defendant underwriters would derive from the IPO and failed to disclose the additional commissions and "laddering" scheme discussed above.

INDUSTRY CLASSIFICATION:
SIC Code: 4813
Sector: Technology
Industry: Computer Services

COMPANY/ISSUER NAME:	Flashnet Communications, Inc.
COMPANY/ISSUER TICKER:	FLAS
COMPANY WEBSITE:	http://www.flash.net

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Saul Kassin, et al. v. Flashnet Communications, Inc., et al.

COURT: S.D. New York	DOCKET NUMBER: 01-CV-10738
JUDGE NAME: Hon. Shira A. Scheindlin
DATE FILED: 11/28/2001	SOURCE: Business Wires
CLASS PERIOD START: 03/16/1999	CLASS PERIOD END: 05/31/2000
TYPE OF COMPLAINT: Complaint (Unamended and Unconsolidated)
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 (New York) 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 FIRST IDENTIFIED COMPLAINT
Class Action Complaint For Violations Of Federal Securities Law
Type: Complaint		Date on the document: 11/28/2001

REFERENCE COMPLAINT

In re Flashnet Communications, Inc. Initial Public Offering Securities Litigation

COURT: S.D. New York	DOCKET NUMBER: 01-CV-10738
JUDGE NAME: Hon. Shira A. Scheindlin
DATE FILED: 04/19/2002	SOURCE: Business Wires
CLASS PERIOD START: 03/16/1999	CLASS PERIOD END: 12/06/2000
TYPE OF COMPLAINT: Consolidated Complaint
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 _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 5

DOCUMENTS FOR THE REFERENCE COMPLAINT
Amended Class Action Complaint For Violations Of The Federal Securities Laws
Type: Complaint		Date on the document: 04/19/2002
US District Court Civil Docket
Type: Docket		Date on the document: 6/28/2007

OTHER DOCUMENTS

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

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