This is a securities fraud class action on behalf of all persons and entities who purchased the common stock of Rhythms Net Connections, Inc. ("Rhythms" or the "Company") between April 7, 1999 through August 2, 2001, inclusive (the "class" and the "class period," respectively). Defendants defrauded the class by (i) issuing positive recommendations about Rhythms even though there were no rational economic reasons or factual bases to justify such recommendations; (ii) failing to disclose that they were issuing favorable recommendations to obtain investment banking business; and (iii) concealing significant, material conflicts of interest that prevented them from providing independent, objective analyses. Defendants advised the public to ignore rational concerns regarding an unproven company like Rhythms and instead used their influence and reputation to tout the Company's stock even though they knew or recklessly disregarded that there existed no reasonable basis for the positive recommendations.
During the class period, while defendants were issuing positive recommendations regarding the Company, Rhythms common stock traded as high as $111.50 per share. Only after the stock fell to approximately $1.00 per share did the defendants finally downgrade their recommendations.
According to the docket, on February 23, 2004, the Court entered the Stipulation and Order of Voluntary Dismissal with prejudice as to certain plaintiffs and without prejudice as to others.