According to a Press Release dated July 31, 2001, the complaint charges defendants with violations of the Securities Exchange Act of 1934 for issuing a Registration Statement and Prospectus (the "Prospectus") that contained materially false and misleading information and failed to disclose material information. The Prospectus was issued in connection with CommTouch's initial public offering of 3,000,000 shares of common stock at $16.00 per share that was completed on or about July 13, 1999. The complaint alleges that the Prospectus was false and misleading because it failed to disclose (i) defendants' agreement with certain investors to provide them with significant amounts of restricted CommTouch shares in the IPO in exchange for exorbitant and undisclosed commissions; and (ii) the agreement between the defendants and certain of its customers whereby the defendants would allocate shares in the IPO to those customers in exchange for the customers' agreement to purchase CommTouch shares in the after-market at pre-determined prices.