Virgin Mobile USA, Inc. - Securities Class Action

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Copyright (c) 2001
Stanford Law School

Virgin Mobile USA, Inc. Summary: The first class action lawsuit against Virgin Mobile USA, Inc. was filed on behalf of shareholders who purchased the common stock of VM USA in connection with the Company's IPO on or about October 11, 2007, or who purchased shares thereafter in the open market.

VM USA, certain of its officers and directors, certain controlling majority shareholders, and the Company's underwriters are charged with including, or allowing the inclusion of, materially false and misleading statements in the Registration Statement and Prospectus issued in connection with the IPO, in violation of the Securities Act of 1933.

The Complaint charges that VM USA raised over $412.5 million through the issuance of 27.5 million shares, despite the Registration Statement's false and misleading statements. Specifically, defendants each failed to conduct an adequate due diligence investigation into the Company prior to the IPO, and they also each failed to reveal, at the time of the IPO, that Virgin Mobile was also not performing according to plan and that results for the third quarter of 2007 -- the period ended a full 2 weeks prior to the VM USA IPO -- showed growing losses as expenses rose and business slowed, indicating that the Company would be forced to revise downward its near-term forward financial and operational guidance.

On November 16, 2007, approximately one month after the IPO, investors learned the truth about VM USA's financial and operational condition, after defendants revealed that the Company had suffered a widening loss for the third quarter, the period ended September 30, 2007, as a result of rising expenses -- a loss of $7.3 million, or ($0.15) per share, compared with a loss of only $5.1 million, or ($0.10) per share, in the same period the prior year. These results also contrasted the $28.9 million in net income, and profits of $0.55 per share reported in the first six months of 2007, reported prior to the IPO. Further, Defendants also revealed that fourth-quarter 2007 outlook called for between 350,000 and 400,000 net customer additions, an anemic amount analysts described as "weak," and that 4Q:07 guidance would be what was described as "well below" expectations.

On this news, shares of VM USA fell nearly 30% in intra-day trading, from an opening trading price of $11.09 per share to a trading low of $8.07 per share before closing the trading day at $9.10 per share, on exceedingly high volume of 6.512 million shares.

According to the Company’s Form 10-Q for the quarterly period ended March 31, 2009, plaintiffs filed two class-action federal lawsuits, one in the District of New Jersey and the other in the Southern District of New York, against the Company, certain of the Company’s officers and directors, and other defendants. The suits alleged that the prospectus and registration statement filed pursuant to the Company’s IPO contained materially false and misleading statements in violation of the Securities Act of 1933, as amended, and additionally alleged that at the time of the IPO the Company was aware, but did not disclose, that results for the third quarter of 2007 indicated widening losses and slowing customer growth trends. On January 7, 2008, the Company filed a motion to consolidate all cases in the United States District Court for the Southern District of New York for pre-trial purposes. On April 7, 2008, the United States Judicial Panel on Multidistrict Litigation granted the motion and consolidated the cases in the District of New Jersey. On March 17, 2008, the district court judge in the New Jersey matter appointed the New Jersey plaintiffs as lead plaintiffs for the litigation. Plaintiffs filed a consolidated amended complaint on May 16, 2008. On July 15, 2008, the Company filed a motion to dismiss the amended complaint. Plaintiffs filed an opposition brief on October 6, 2008 and the Company filed a reply brief on November 5, 2008. On March 9, 2009, the court issued an order denying the Company’s motion to dismiss the case. The parties soon after engaged in discovery proceedings.

On July 23, 2010, the plaintiff filed a motion for preliminary approval of the settlement. The proposed settlement is in the amount of $19.5 million in cash. That same day, a Stipulation of Dismissal of Defendant Lehman Brothers, Inc. was filed. The Stipulation was signed by Judge Susan D. Wigenton on July 27, 2010, and the action was dismissed as to Defendant Lehman Brothers, Inc., only. The settlement was preliminarily approved on August 20, 2010. The settlement hearing is scheduled for December 8, 2010. On December 9, 2010, the Court entered the Final Judgment Order. The settlement was approved and the case is now terminated.

INDUSTRY CLASSIFICATION:
SIC Code: 4812
Sector: Services
Industry: Communications Services

COMPANY/ISSUER NAME:	Virgin Mobile USA, Inc.
COMPANY/ISSUER TICKER:	VM
COMPANY WEBSITE:	http://www.virginmobileusa.com/

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Michael Volpe, et al. v. Virgin Mobile USA, Inc., et al.

COURT: D. New Jersey	DOCKET NUMBER: 07-CV-05619
JUDGE NAME: Hon. Susan D. Wigenton
DATE FILED: 11/21/2007	SOURCE: Notice of Filing
CLASS PERIOD START: 10/11/2007	CLASS PERIOD END: 11/16/2007
TYPE OF COMPLAINT: Complaint (Unamended and Unconsolidated)
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Brodsky & Smith, LLC (former Pennysylvania) 11 Bala Avenue, Suite 39, Bala Cynwyd, PA, 19004 (voice) 610.668.7987, (fax) 610.660.0450, esmith@Brodsky-Smith.com Coughlin Stoia Geller Rudman & Robbins LLP (Melville) 58 South Service Road, Suite 200, Melville, NY, 11747 (voice) 631.367.7100, (fax) 631.367.1173, info@csgrr.com/ Kahn Gauthier Swick, LLC (NY) 12 East 41st Street, 12th Floor, New York, NY, 10016 (voice) 212.920.4310, (fax) 212.696.3730, info@kglg.com Schatz & Nobel, P.C. 330 Main Street, Hartford, CT, 06106 (voice) 800.797.5499, (fax) 860.493.6290, sn06106@AOL.com Schiffrin Barroway Topaz & Kessler, LLP (Radnor) 280 King of Prussia Road, Radnor, PA, 19087 (voice) 610.667.7706, (fax) 610.667.7056, info@sbtklaw.com Zwerling Schachter & Zwerling LLP 845 Third Avenue, New York, NY, 10022 (voice) 212-223-3900, (fax) 212-371-5969, inquiry@zsz.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 6

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Class Action Complaint For Violations Of Federal Securities Laws
Type: Complaint		Date on the document: 11/21/2007
Stipulation and Order Consolidating Related Actions and Setting Briefing Schedule
Type: Order of Consolidation		Date on the document: 12/18/2007
Notice of Motion of the Volpe Group to Consolidate any Future Related actions; to be Appointed Lead Plaintiff; and to Approve Proposed Lead Plaintiff's Choice of Counsel
Type: Motion		Date on the document: 01/22/2008
Letter Order
Type: Order Appointing LP/LC		Date on the document: 03/17/2008

REFERENCE COMPLAINT

In Re Virgin Mobile USA IPO Litigation

COURT: D. New Jersey	DOCKET NUMBER: 07-CV-05619
JUDGE NAME: Hon. Susan D. Wigenton
DATE FILED: 05/16/2008	SOURCE: Docket
CLASS PERIOD START: 10/10/2007	CLASS PERIOD END: 03/12/2008
TYPE OF COMPLAINT: Consolidated Complaint
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Carella Byrne Bain Gilfillan Cecchi Stewart & Olstein 5 Becker Farm Road, Roseland, NJ, 7068 (voice) 973.994.1700, (fax) 973.994.1744, Info@CarellaByrne.com Kahn Gauthier Swick, LLC (NY) 12 East 41st Street, 12th Floor, New York, NY, 10016 (voice) 212.920.4310, (fax) 212.696.3730, info@kglg.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 2

DOCUMENTS FOR THE REFERENCE COMPLAINT
Consolidated Amended Class Action Complaint and Demand for Jury Trial
Type: Complaint		Date on the document: 05/16/2008
Motion for Settlement Preliminary Approval
Type: Motion		Date on the document: 07/23/2010
Stipulation And [Proposed] Order Of Dismissal With Prejudice Of Lehman Brothers, Inc.
Type: Other		Date on the document: 07/23/2010
Stipulation And Order Of Dismissal With Prejudice Of Lehman Brothers, Inc.
Type: Order		Date on the document: 07/27/2010
Order Preliminarily Approving Settlement And Providing For Notice Of Pendency
Type: Order		Date on the document: 08/20/2010
Final Judgment And Order Of Dismissal With Prejudice
Type: Order		Date on the document: 12/09/2010
U.S. District Court Civil Docket
Type: Docket		Date on the document: 12/10/2010

OTHER DOCUMENTS
Class Action Complaint for Violations of Federal Securities Laws
Case Name and/or Number: Ellen Brodsky, et al. v. Virgin Mobile, USA, Inc., et al.
Type: Complaint		Date on the document: 11/26/2007
Class Action Complaint - Jury Trial Demanded
Case Name and/or Number: Roger Joseph, Jr., et al. v. Virgin Mobile USA, Inc., et al.
Type: Complaint		Date on the document: 12/06/2007

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