The complaint alleges that, in exchange for the excessive commissions, members of the underwriting group Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc., Hambrecht & Quist LLC and Thomas Weisel Partners LLC allocated Rhythms Netconnections shares to customers at the IPO price of $21.00 per share. To receive the allocations (i.e., the ability to purchase shares) at $21.00, the 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 Rhythms Netconnections stock rocketed upward (a practice known on Wall Street as ``laddering'') was intended to (and did) drive Rhythms Netconnections' share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the underwriters and their customers to reap enormous profits by buying stock at the $21.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $75 on its first day of trading, and subsequently rose to a peak high of $111.50 on April 13, 1999.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 Rhythms Netconnections offering contained material misstatements regarding the commissions that the underwriters would derive from the IPO transaction and failed to disclose the additional commissions and ``laddering'' scheme discussed above.