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NextCard, Inc. Summary: According to a Press Release dated November 30, 2001, the complaint alleges that NextCard and certain of its officers and directors at the time of its IPO violated the federal securities laws by issuing and selling NextCard common stock pursuant to NextCard's initial public offering and a secondary offering of NextCard stock without disclosing to investors that several of the underwriters of the NextCard IPO had solicited and received excessive and undisclosed commissions from certain investors.
In exchange for the excessive commissions, the complaint alleges, defendants (underwriters of NextCard's IPO), allocated shares of NextCard stock to certain investors at the IPO price of $20.00 per share. To receive the allocations (i.e., the ability to purchase shares) at $20.00, 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 NextCard stock rocketed upward (a practice known on Wall Street as 'laddering') was intended to (and did) drive NextCard'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 NextCard stock at the $20.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $40.75 during its first day of trading.
The complaint also alleges that NextCard was able to price its secondary offering at an artificially high $36.9375 per share due to the continued effects of the foregoing violations.
The complaint further alleges that defendants violated the Securities Act of 1933 because the Prospectuses distributed to investors and the Registration Statements filed with the SEC contained material misstatements regarding the commissions that the underwriters would derive from the IPO and failed to disclose the additional commissions.
The lawsuit asserts claims under Section 11, 12 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC.
INDUSTRY CLASSIFICATION:
SIC Code: 6141
Sector: Financial
Industry: Consumer Financial Services
| COMPANY/ISSUER NAME: | NextCard, Inc. |
| COMPANY/ISSUER TICKER: | NXCD |
| COMPANY WEBSITE: | http://www.nextcard.com |
| FIRST IDENTIFIED COMPLAINT IN THE DATABASE | |||||||||||||||||
| Kassin, et al. v. NextCard, Inc., et al. | |||||||||||||||||
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REFERENCE COMPLAINT | |||||||||||||||||
| In re Nextcard, Inc. Initial Public Offering Securities Litigation | |||||||||||||||||
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| 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 | ||
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