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Class Action Lawsuit Against VA

CmdrTaco posted more than 13 years ago | from the well-thats-no-good dept.

VA 218

Yahoo has a story up now about a class action Lawsuit against VA, which is my employer, and owns Slashdot, so of course I'm biased blah blah. Of course, I have no clue about any of the stuff in the article because it's about stock allocation by Credit Suisse during the IPO, and that sort of stuff is way outside the realm of things I have any understanding of. Update: 01/11 09:58 PM by H : The Milberg people have a website with more info and PDFs about it -- and I just tried VA, who have "categorically no comment."

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218 comments

do you perhaps mean "VA Linux"? (3)

po_boy (69692) | more than 13 years ago | (#513435)

Every time I see stories about VA, I always read them as something like "Class Action Lawsuit Against Virginia". I bet you're glad that slashdot is not owned by the Commonwealth of Virginia, so act like it!

lets assume the worst, (1)

bludstone (103539) | more than 13 years ago | (#513436)

and VA Linux gets shut down.

Does slashdot have a backup plan? I really hope that if VA goes, slashdot will still somehow survive.

I assume some kind-hearted-soul would be able to provide slashdot with ample hosting?

yikes.

Re:lets assume the worst, (1)

tbannist (230135) | more than 13 years ago | (#513442)

If Microsoft bought slashdot they'd certainly stick a few dozen developers on the system to help fix it up.

Of course, the first noticeable result would be the disappearance of all the pro-Linux and Anti-MS... ;)

Re:I do not speak legalese (3)

cworley (96911) | more than 13 years ago | (#513444)

There are a slew of lawyers that make a great deal of money friviously suing claiming securities violations.

Many of the companies I own stock in are being sued likewise (Corel, Plug Power, and Citrix).

Although these suits are without merit, they hurt the companies stock prices dramtically: look at each of the above company's history, and see the biggest dip the day after the suit starts (none have recovered).

Often, these suits end if the company can pay the lawyers enough money to "end the suit without predjudice", meaning, the shareholders can continue the suit (if they want), but the lawyers got their money and will run.

There was an article in Forbes a few months back detailing one lawyer who does busines this way (worth over $10B).

The companies and the shareholders (including the plaintifs) will all loose a great deal of money over these suits. The only winners (ever) are the lawyers.

That's why they do it.

Just FYI not a Troll..... (2)

momguy (302416) | more than 13 years ago | (#513448)

I went to check, here it is so you don't have to...

VA Linux Systems

today's high 9.50________previous close 8.09
today's low 7.87_________bid 8.50
today's open 8.00________ask 9.00
volume 2,034,900________earnings per share -1.92
52-week high 207.75_____dividend per share Not Avail.
52-week low 6.62_________dividend pay date Not Avail.
P/E ratio Not Avail._____ex-dividend date Not Avail

Re:Actually Quite Common... (2)

donutello (88309) | more than 13 years ago | (#513450)

This Cisco exec should then be sued by the shareholders of Cisco for not making a business decision with solely the interests of Cisco the company and its shareholder value in mind. If someone is employed/appointed to the board of a company it is their responsibility to act solely in their interests with respect to his/her authority in the company.

I wouldn't blame the IPO company for offering the bribe.

Re:Sounds like typical Stock Market Gripes to Me (1)

joshamania (32599) | more than 13 years ago | (#513451)

MW is just a bunch of bloodsucking dorksmokers who abuse the class action lawsuit for their own gain. They love the fact that they can sue people and organizations based on the perception that the people/organizations being sued have done wrong. "Well, the stock price went down, so we want you to pay our clients for their loss (read: pay 1,000,000 people $100 each so we can take a 30% commission on $100,000,000).

Re:Sounds like typical Stock Market Gripes to Me (2)

duffbeer703 (177751) | more than 13 years ago | (#513452)

Are you a complete idiot?

If this was a story about Microsoft fixing licensing fees you would be screaming bloody murder.

This suit is about Credit Suisse, a large investment bank, making illegal backend deals to sell stock which was supposed to be offered PUBLICLY to large customers at preferred prices.

The fact that some idiots moderated you up to 5 is even more frightening. Just because a company sells Linux-based software doesn't make it as clean as the wind-driven snow!

I think it is time for trolls like you to just go away and crawl back under the rock that you came from.

VA Linux (Linux or Company) (1)

stilwebm (129567) | more than 13 years ago | (#513459)

I like how the lawyers allowed VA Linux to be referred to as only "Linux".

In connection therewith, Linux filed a registration statement, which incorporated a prospectus (the ``Prospectus''), with the SEC.

link (2)

flynt (248848) | more than 13 years ago | (#513461)

for those wondering what this is about, this story never made slashdot the other day even though it was submitted by many people. check it out, then decide for yourself. Zdnet story [zdnet.com]

Re:what it means... (1)

einstein (10761) | more than 13 years ago | (#513463)

the act of agreeing to sell at a later date at a fixed price was what I've always understood as the loophole many IPO people use to get rich fast off of the IPO... is this just an example of VA geting caught for what millions have done before them?

My Non-Lawyer-Like Summary (5)

Dredd13 (14750) | more than 13 years ago | (#513469)

OK, so I read the complaint. Here's my understanding of it (which surely some people will later refine/correct)

1.) the prospectus for LNUX claimed that Credit Suisse would get 'n' shares
2.) Credit Suisse actually procured 'n+x' shares.
3.) Credit Suisse then made backroom deals with big Credit Suisse customers to sell them the stock at "better than market, but still not IPO price", in exchange for increased commissions.
4.) This "forced inflation" of the price, caused others to have to pay higher-than-fair value for the stock.

The plaintiffs appear to contend that the offering was illegal because (a) they lied on their prospectus (points 1 and 2 above), and (b) people paid artificially increased prices for the shares (points 3 and 4 above).

Basically. That's certainly not definitive legalese, but its how this untrained guy (who happens to enjoy reading/understanding court documents) would read it.

D

Re:Check out those documents... (1)

Galaga88 (148206) | more than 13 years ago | (#513475)

Dude, this is /. Don't read the article before posting a follow-up, or you'll be rational again like this.

Very little merit in this. (2)

HiyaPower (131263) | more than 13 years ago | (#513476)

There was a bit foolishness going on by Credit Suisse for which they should answer and perhaps even compensate folks. On the IPO, they charged the folks that got the allocation from CS on a "pay to play" basis. You want shares, then you gotta pay us a higher comission than our normal trades with you would command. Since the shares were expected to pop on the IPO, this tarrif was gladly borne by the institutions buying shares. Straight raw greed, for which there is no excuse. As an underwriter, CS was compensated with shares of VA over and above what it sold to its clients on the IPO. They got greedy for extra nickels. The usual manner that this is done is to allocate shares to clients on an unwritten quid pro quo that says that you will give them a higher commission on other trades and/or share flow. Less tracable, but every bit as dishonest, really.

None of this was probably known or imagined by VA. I suspect that if the "net stocks" had not crashed and burned, nobody would care. As it is, there is a lively "cottage industry" of lawyers such as the ones filing the case who will invent a class and file an action on pretty much anything after a stock's price has fallen. At the minimum, they expect to extort their legal fees from the company that they are filing against. The members of the class that they represent (please read invent) will get little or nothing. If they take all the time to file the papers necessary to claim their award, they will not make minimum wage. In the meantime, the law firm compensates itself with the majority of the moneies awarded.

<rant>
This practice by legal firms such as this represents perhaps the lowest in the legal profession. While they will tell you with a straight face that they are "representing the little guy", they are in truth only representing themselves.

disclosure: I own no VA stock
</rant>

Re:Several people are asking (2)

hidden (135234) | more than 13 years ago | (#513478)

no it's not resonable. You should choose a term that relatively clearly & uniquely refers to the company in question the term Linux clearly & uniquely refers to something else...

Re:do you perhaps mean "VA Linux"? (2)

jd (1658) | more than 13 years ago | (#513481)

It might be fun if the "wrong" VA turns up at the court case!

Whoa (2)

sharkey (16670) | more than 13 years ago | (#513483)

Wait a minute! I was looking forward to watching a lawyer cross-examine a stack of CDs. Or, perhaps someone will slap together a box using Festival to pipe an Eliza program quoting from fortune-mod to respond to questions:

"Mr. Linux, what can you tell me of the conversation that took place in the VA Linux Systems boardroom on August 28, 1999 at 1500?"

"Clothes make the man. Naked people have little or no influence on society. --Mark Twain"

"Mr. Linux, may I remind you that this is a court of law?"

"Old musicians never die, they just decompose."

"And just what do you mean by that remark?"

"Q: What do you call a blind, deaf-mute, quadraplegic Virginian? A: Trustworthy."

And so forth, into the night...

--

I do not speak legalese (1)

Dalroth (85450) | more than 13 years ago | (#513484)

I don't speak legalese, so can someone please put into plain english what exactly is going on here?

Thanks!

Yes quite typical, but different than you say... (5)

HEbGb (6544) | more than 13 years ago | (#513485)

A more likely scenario, from another perspective:

1. VA Linux notices hot market for IPO's
2. VA sees lots of others making huge money from stock offerings
3. VA promotes Linux as 'next big thing'
4. VA associates itself with being the bringer of Linux
5. VA uses Slashdot to bolster that perception by the public
6. VA misleads people into thinking that they actually can provide real value, and be a profitable company.
7. Unwitting investors believe this, and buy the stock.
8. Slashdot founders get millions.
9. VA insiders cash out their options, reaping millions of their own (along with the VC's)
(The CEO, Larry Augustin, made off with $10 Million of stockholder money)
10. VA Linux stock crashes, as they have no possible way of justifying the market cap.
11. VA Linux stock loses 95% of its value
12. The shareholders get pissed off
13. Lawyers find a way for some people to recoup their losses
14. The people who lost money eagerly go after VA.

Folks, do you have ANY idea how much money the VA insiders walked away with? Do you have any idea on WHOSE money that really was? Do you really think that the VA insiders actually earned it, or did they con the public into thinking there was real value?

If you con someone, is it the fault of the con-man, or the fault of the 'idiot', as you say?

This story is repeated every day with different companies. This may be flaimbait, but I think it is about time that company founders start accepting the consequences of misleading a gullible public.

[For the record, I never bought or sold a single share of stock in my life. I just watch with disgust, usually, at the behaviour of these hype-stock companies]

Bastards! (3)

tech81 (128914) | more than 13 years ago | (#513486)

Bastards! How dare they sue anyone or anything affiliated, much less owning, Slashdot!!!

I was wondering (1)

WildBeast (189336) | more than 13 years ago | (#513487)

Is their a company that haven't been sued yet? All the profit that this companies make goes in the pockets of lawyers. People even get sued for exercicing their right of free speach.

Re:Several people are asking (2)

I_redwolf (51890) | more than 13 years ago | (#513488)

When you are suing someone you usually want to be specific about what you are suing them for. Any good lawyer knows that. You research, study and get all the dirt on something before you sue.

They haven't done their homework and thats why people are pissed that they are associating totally two different things (company/kernel). This shouldn't be done; however I don't think we'll hear much from Linus Torvalds on the topic. Worst comes to worst the matter will be cleared up in court. Whether it be with a counter suit from Linux claiming that the software/kernel are too different things and that as a result an estimated "number here" was loss.

That's what happens when you are greedy and don't know what you are talking about.

craziness (1)

allknowing (304084) | more than 13 years ago | (#513489)

Lawyers are ruling this world-- with their greedy little minds and eyes. lets kill all the lawyers!

Check out those documents... (2)

Wonko42 (29194) | more than 13 years ago | (#513490)

Take a look at the legal documents on the Milberg Weiss site. It seems to me they have a perfectly valid, very strong case against VA Linux, and as someone who participated in the IPO and is thus affected by this, after reading the documents, I've come to the conclusion that I agree with them.

Looks like there were some shady dealings going on with the IPO. No matter how much I like VA Linux, there's no excuse for this, and no company should be allowed to get away with it. Here's hoping they learn a hard lesson.

--

So who got what? (1)

Dancin_Santa (265275) | more than 13 years ago | (#513492)

The main thrust of the Plaintiff's charge is that VA Linux and its underwriters sold IPO positions to certain people pre-IPO. In turn, these people dumped their relatively cheap shares resulting in many smaller investors left holding the bag. Link [yahoo.com]

Is this strictly illegal (it certainly seems a little unethical)? Does it happen frequently?

Have I missed the whole point of the suit, IANAL after all.

Dancin Santa

Re:Goddamn Legalese (1)

iamriley (51622) | more than 13 years ago | (#513493)

I wonder if the lawyers shortened VA Linux Systems, Inc. to "Linux" for a reason (VA Linux Systems, Inc. (``Linux'' or the ``Company''...)) or if the lawyer is just clueless. Wouldn't "VA" have been a better abbreviation? It's more concise and accurate.

Could Linus sue the lawyers for Trademark Infringement(TM)?

Re:Sounds like typical Stock Market Gripes to Me (1)

b100m (69755) | more than 13 years ago | (#513506)

amen.
___________________________________________ ______
$which weed

Re:So... (1)

Zico (14255) | more than 13 years ago | (#513507)

You actually have VA Linux stock? (And admit to it!??) How much money have you lost so far on it? :)

Cheers,

Re:This is simple stuff (2)

rho (6063) | more than 13 years ago | (#513508)

Umm... okay

I'm not against lawsuits -- they actually are one of the best methods by which corporations can be kept in line, instead of massive governmental control.

Plus, that 30% settlement money doesn't just sit around in a pile, the lawyers pay employees, buy yachts, buy computers, pay nerds to run the computers systems, etc. It's a form of wealth redistribution.

I just find it pathetic that a law firm thinks so little of itself (or has such a limited imagination) that it does things like this...

Re:Actually Quite Common... (5)

Carnage4Life (106069) | more than 13 years ago | (#513509)

This Cisco exec should then be sued by the shareholders of Cisco for not making a business decision with solely the interests of Cisco the company and its shareholder value in mind. If someone is employed/appointed to the board of a company it is their responsibility to act solely in their interests with respect to his/her authority in the company.

I feel the same way but the truth is that dotcomm boards have been getting away with things that would seem unethical in traditional companies for quite a while. Here's an article on Fortune [northernlight.com] about some more weird dealings by the board of a dotcomm, most of these seem like fraud or at least seem unethical but so far not that many people seem to be getting punished.

Here's an expose on the shadiest dealing of the New Economy entitled MISADVENTURES IN THE ME-FIRST ECONOMY: Four tales from the ethical gray zone of the Internet economy [fortune.com] from Fortune.

Grabel's Law

Linux is Linus's trademark (1)

XenonOfArcticus (53312) | more than 13 years ago | (#513510)

I too e-mailed them to point out the Linux is a trademark of Linus Torvalds, and he might be a bit miffed about them using it as shorthand for VA Linux Systems. Slander comes to mind.

Press Releases passed off as legitmate news (3)

schussat (33312) | more than 13 years ago | (#513511)

I find it disconcerting that Yahoo promulgates something like a press release from the suing law firm, and passes it off as "financial news." Without any consideration of the lawsuit's merits or seeking further sources of information, the press release tells people they can even join the lawsuit!

Obviously there's a whole lot more to this story. I don't dispute its potential news-worthiness and appropriateness for posting here. But the creation of news that is so uncritically "reported" by simply issuing a press release seems somehow opportunistic and irresponsible.

Oh yeah, we're talking about lawyers and news online. Never mind.

-schussat

Sounds like typical Stock Market Gripes to Me (5)

alteridem (46954) | more than 13 years ago | (#513512)

Scenario;
  1. Idiot reads news article that Linux is the next up and coming thing, doesn't really know what linux is...
  2. VA Linux offers for IPO,
  3. Idiot makes association between Linux and VA Linux, dreams of getting in early and retiring early begin,
  4. Life savings are withdrawn from bank and invested saying "How could it fail with LNUX [yahoo.com] as the stock symbol?"
  5. VA Linux initially does well, dreams of retiring early are replaced with dreams of owning small nations,
  6. VA Linux suffers the same fate of many dot coms last year and takes a downturn,
  7. Idiot's dreams explode and idiots wife starts bitching about loosing their life savings,
  8. Idiot does the typical thing by not blaming himself for gambling everything on something he knew nothing about, begins looking for scapegoats...
  9. Idiot meets other idiots and forms a class action lawsuit,
  10. Lawyers dive in like vultures since they are the only ones who will make any serious money
This story is repeated every day with different companies. This may be flamebait, but I think it is about time that people started accepting the consequences of the risks they take.

This is simple stuff (3)

rho (6063) | more than 13 years ago | (#513513)

$$$How to Make Money Fast$$$
  1. Law firm trolls through SEC filings
  2. Law firm finds moderately successful, publicly traded company
  3. Law firm finds something awry in a filing
  4. Law firm advertises for publicly traded company shareholders to join in minority shareholder suit against said company
  5. Publicly traded company, in fear for its stock price, settles quickly
  6. Law firm makes 40% on settlement, each shareholder who joined class-action suit receives a check for $10
  7. Law firm rinses and repeats

File this under To Be Ignored

Credit Suisse at fault? (1)

ZahrGnosis (66741) | more than 13 years ago | (#513514)

It sounds like Credit Suisse were the people causing the problem.

Apparently Credit Suisse took money from investors and guaranteed them shares of the IPO stock in VA Linux before the shares were actually public. Worse, the press release claims that they guaranteed investors a fixed price AFTER the IPO went off. It sounds like all of this was in exchange for money (aka "kickbacks").

Keeping in the realm of IANAL, from what I remember of IPOs, and going through one myself right now, the IPO price is never solid until almost immediately before it is released to the public. The SEC controls this stuff very closely, so any guarantee of prices or of share allocation significantly before an IPO is bad mojo.

This is different,of course, from investors directly investing in VA Linux. Pre-IPO, VA can solicit investors anywhere, but the problem is Credit Suisse's involvement, and the fact that they were exchanging shares earmarked for the IPO instead of some more direct equity (preferred stock, for example).

No matter what, if someone did do something wrong here, it sounds like Credit Suisse, not VA Linux.

Re:One-Click Lawyer Retaining Patent? (1)

ncc74656 (45571) | more than 13 years ago | (#513515)

Hmmm... Had a look at the second linked webpage. It contains some guff, followed by a bug button saying:

"Click Here to Retain Milberg Weiss"

Now there's a nice target for Amazon to sue...

Nope...for that to happen, it would have to have been something like "Retain Milberg Weiss With 1-Click©&reg" (apologies to Beagle Bros, none to Amazon.com).
Or maybe they (milbergweiss) already have a patent for 'one click lawyer retaining'?
That is a distinct (and unpleasant, though not unexpected) possibility.

Re:Emily wears diapers! (1)

momguy (302416) | more than 13 years ago | (#513516)

Your mom said 'VA Linux is as solid as my moral standing' I guess she was wrong!!

Re:Check out those documents... (2)

Dredd13 (14750) | more than 13 years ago | (#513517)

Actually, participants in the IPO are NOT really affected by this.. the folks who are affected are those who DIDN'T get their stock @ $30.00 a share, but instead had to pay "through the nose" for it, allegedly, because CS/FB artificially inflated the price of the stock in the aftermarket.

that's the allegation, near as I can tell.

D

IANAL, but... (5)

Tony Shepps (333) | more than 13 years ago | (#513518)

Simplifying things (this is entirely *alleged*):

It looks like a few select investors and fund managers were hot to get in on the IPO. Not just anyone can buy IPO shares at the initial price, because those shares are restricted. So the investors paid off Credit Suisse, who were in charge of the IPO, by giving Credit Suisse extra commissions... a deal that Credit Suisse negotiated.

In some cases, the investor's commissions were determined by how much the IPO stock rose, aand therefore how much money the investors made on day one. (Note: and you thought BOXING was fixed...)

Even though CS did the dirty work, this involves VA Linux because it's VA Linux who writes the conditions of the IPO deal. And if not as many shares were available as VA Linux said there would be, they "lied" -- and the rest of the shareholders have gotten a raw deal. And due to supply and demand, if not as many shares were available as VA Linux said there would be -- that would have the effect of driving up the share price even higher at its opening.

Re:I do not speak legalese (1)

BadlandZ (1725) | more than 13 years ago | (#513527)

"What's up with listing "Linux" as the offending party?"

In related news, the GNU Software Foundation has filed suit against Yahoo on behalf of Linus for slander. ;-)

Yahoo has falsly reported that "Linux" was involved in illegal stock manipulation, when it fact the story was actually about Credit Suisse, a company representing VA, a hardware company.

Correction (1)

HEbGb (6544) | more than 13 years ago | (#513529)

Larry Augustin only made off with $9,612,905 according to Yahoo Finance [yahoo.com], not $10 Million, as I had earlier reported.

Sorry, mea culpa.

Other insiders, and their 'earned' income:

Rob Russo (VP): $6,698,959
(While working only part-time - he's VP of two other companies as well.)

Bruce Twickler: $7,998,487

Not to shabby for a company which has made almost no contribution to the technological world, and has never earned a dime.

I expect we'll be seeing a lot more anger from stockholders as they realize they've been had..

Re:These guys sue everybody (5)

Wellspring (111524) | more than 13 years ago | (#513534)

These kinds of tort proceedings are very common. Of course, the lawyers who file the lawsuits on behalf of the shareholders typically represent only a small fraction of shareholders. These lawsuits are designed to mainly benefit the law firms which file them, rather than the stockholders. (This, BTW, is the case with most class action lawsuits because they aren't adequately regulated. Lawfirms constantly defend the broken system by claiming that Big Corporations are trying to stop you from suing them.)

This is vulturism, and the whole field needs reform. However, President Clinton has pushed hard against every kind of tort reform effort. Hopefully we'll see something in the near future to stop these stupid and predatory lawsuits.

Haaaa haaaaa (1)

Anonymous Coward | more than 13 years ago | (#513538)

"So long, motherfuckers!"

Re:Goddamn Legalese (1)

Anonymous Coward | more than 13 years ago | (#513539)

Conclusive proof that all linux users are criminals.

Re:Hemos Time Machine (1)

Hemos (2) | more than 13 years ago | (#513541)

i've spent hours working on that machine - it's the it thing everyone's talking about. *grin*

Should we hack this law firm? (1)

perdida (251676) | more than 13 years ago | (#513542)

Yes, we should.

*duck*

<disclaimer>I am just kidding.</disclaimer>

Anyway, what I am wondering is WHY would VA arrange in price fixing in their IPO, if they did? and how common is this practice?

perdida

Re:lets assume the worst, (1)

limpdawg (77844) | more than 13 years ago | (#513544)

If VA was shut down most likely their assets would be sold off. So Andover would be sold off, and Slashdot would go with it. And with Rob's contract they couldn't do anything to damage Slashdot except for not hiring any extra developers to work on the code. So if Microsoft bought Slashdot it would stay the same.

Re:Did M$ help write the press release? (3)

interiot (50685) | more than 13 years ago | (#513545)

Well, their stock symbol is LNUX [yahoo.com]. If you want, you can blame VA for taking that symbol, and thus causing confusion. *shrug*
--

Re:Sounds like typical Stock Market Gripes to Me (1)

zhensel (228891) | more than 13 years ago | (#513546)

I think it's funnier when: 1. Idiot suffers no measurable damage what-so-ever 2. Idiot calls up other idiots who all own some product 3. Idiots call lawyer 4. Lawyer gets 100 million, idiots get 400 bucks, primary idiot gets 25,000 bucks This is the Toshiba lawsuit settlement for you. The wierd thing is that given the fact that Toshiba probably wrote off $9 billion in taxes yet only a fraction of that was ever claimed, they most likely made money on the deal as well. Otherwise, why would they settle such a blatently frivilous lawsuit (over an error in a laptop floppy disk controller occurring 1 in 500k saves and not even repeatable in a labratory setting). Hell, who doesn't know floppies are unreliable?

Re:link (2)

Hemos (2) | more than 13 years ago | (#513547)

uh...no. this is different. read the stories - they look close, but the sec probe is not /of/ va - it's the underwriters.

Re:what it means... (1)

alprazolam (71653) | more than 13 years ago | (#513548)

there is a wall street journal quote on the lawyers page (in a pdf file) that confirms what you say. which doesn't mean it isn't still illegal. however the evidence appears somewhat circumstansial.

Re:These guys sue everybody (1)

kootch (81702) | more than 13 years ago | (#513549)

THEY aren't suing. They are retained by leading plaintiffs that feel that they've been treated in an illegal fashion. The only people that can sue are those that owned stock during the "class period". This law firm is representing those that are suing.

Actually Quite Common... (5)

Carnage4Life (106069) | more than 13 years ago | (#513550)

You are quite right. What is particularly interesting is that this was actually a common practice with hot technology IPOs , VA Linux is simply getting the short end of the stick from investors who are pissed of by the stock's massive drop [yahoo.com], most companies that drop that far are usually hit by lawsuits from shark's masquearading as lawyers and it's actually a surprise that it took this long. Unfortunately what this means is that if this lawsuit sticks ta lot more tech companies that IPOed in 1999/2000 may face heat for what was at the time a common practice.

PS: Another questionable practice that was quite common in 1999/2000 was giving away lots of shares by CEOs of IPO-track tech companies to executives of potential customers. These executives then made sure the IPO-track company won whatever contract was being vied for which would then make the pre-IPO company a hot stock when it burst on the market.

E.g. www.routerparts.com gives Cisco exec a few shares before their IPO and places him on their board. Cisco exec then makes sure routerparts.com gets a large order from Cisco and tells all his friends about them. routerparts.com now has good buzz since it has made deals with Cisco and other companies and becomes a hot IPO stock. Finally, the Cisco exec unloads the shares and makes several hundred to a few million dollars.

Grabel's Law

Linux is a kernel! (or in a larger view, an OS!) (1)

Mr Z (6791) | more than 13 years ago | (#513570)

Yeah, it's a bit like suing Windows, isn't it? Or maybe NTKRNL.EXE?

--Joe
--

Re:I knew this would happen (1)

iamriley (51622) | more than 13 years ago | (#513571)

PS. Any info on where I sign up to join the lawsuit? Thanks.

Just click here [milberg.com] and click the button at the bottom of the page. Don't forget to tell them how terrible Linux is so they know you're not a spy. Good luck.

Hemos Time Machine (2)

cmoanz (88260) | more than 13 years ago | (#513572)

Posting updates from future....

How does Hemos get so far ahead of us?

--

Your "reasonable facsimile" of OSDN Slashdot (1)

yerricde (125198) | more than 13 years ago | (#513573)

Kuro5hin [kuro5hin.org]: technology and culture, from the trenches
Everything Slashdot should have been.

K5 is like Slashdot, but it allows users to see and moderate the submission queue. The stories are more detailed. It also has very little spam (the -1 FP/portman/goatse.cx shit) because the community just doesn't tolerate it.

But if VA Linux dies, so does the rest of OSDN [osdn.com], which means no more free hosting for free software projects [sourceforge.net], as most free servers [freeservers.com] limit file sizes and bandwidths to keep the warez [warez.com] kiddies from hogging their resources.


Like Tetris? Like drugs? Ever try combining them? [pineight.com]

Re:Check out those documents... (1)

zhensel (228891) | more than 13 years ago | (#513574)

Hmmm... you mean unlike every single other IPO in the history of the stock market? Insiders always get inside deals - thus the name. If you join this class, you are just trying to get rich off the sure-to-follow settlement from Credit Suisse. Was your decision on the price point at which you bought and sold affected by this? Nope. The only thing that happenned was that a couple folks on the inside got to buy a little lower. The stock market isn't a fair place so go stick your money in a savings account if you can't handle it. Or, alternatively, become a trading insider and hop on the next similar deal :) - of course that requires tons and tons of cash, which could be problamatic (for me at least).

Re:Don't give it much credence (1)

Skeptopotamus (303674) | more than 13 years ago | (#513575)

Considering their press release seems to think they were screwed out of shares of "Linux", I wouldn't exactly call these people clueful.

Yeah these guys are idiots. Everyone knows RedHat == Linux.

Ironic double-edge (2)

Jeffrey Baker (6191) | more than 13 years ago | (#513576)

Looks like one allegation is that the underwriter illegally inflated the opening price of the stock. The irony here is that many of the people who participated in the IPO, a portion of whom were open-source contributors who were given a few hundred shares each, benefitted enormously by purchasing the stock at the IPO price, and selling it immediately at or near $300. It was a nice windfall for a lot of hackers that was apparently the result of some illegal back-room banking.

Lead plaintiffs? (1)

Dr.Evil (47264) | more than 13 years ago | (#513577)

The Milberg Weiss website is asking for applicants to be lead plantiffs. My question is: how the hell do you file a lawsuit, even if it is class-action, with no lead plaintiff to begin with? Can a lawyer just file a lawsuit first, and find a plaintiff later? That somehow doesn't seem right...

Re:I do not speak legalese (2)

Hooptie (10094) | more than 13 years ago | (#513578)

As I have said before, all legalese translates to:

"Bend over and enjoy it!"

Hooptie

So... (2)

Greyfox (87712) | more than 13 years ago | (#513579)

If the class action suit fails, can we sue the law firm for making our shares of LNUX drop? Maybe a class action suit is in order...

Re:This is simple stuff (1)

zhensel (228891) | more than 13 years ago | (#513580)

And this is why we need a constitutional amendment against frivilous lawsuits. Don't come yelling to me about how you can't define frivilous (I sure won't try to draw that line), but this is way out of control. Everyone gets hurt accept the lawyers. You see, the lawyers get 30% of the cash, but the defendents pay out all that they lose. Therefore, assuming everyone sues and gets sued one time, the lawyers' pocket books collectively increase by 30% of the total determined fine while those of the US citizens decrease by the same amount. Don't you see it? A conspiracy!

Several people are asking (3)

Tairan (167707) | more than 13 years ago | (#513581)

Why the press release uses 'Linux' instead of 'VA Linux.' One fellow poster even went so far as to suggest that this was some kind of Microsoft plot (like everything is on Slashdot..)to draw criticism of Linux (the kernel) I'd like to point several things out to these people:

Look at the name VA Linux - 'Linux' is the largest portion of the name

This lawsuit is about the aclaimed practices of VA Linux during their IPO - Their sticker name is LNUX I believe (or something very close)

One of the company's biggest focus is on Linux

Any ( and probably all ) these reasons could be why the lawfirm chose to use 'Linux' as the abbreviation of VA Linux. It really does make sense when you think about it.

Bah Humbug (1)

klm20 (39056) | more than 13 years ago | (#513584)

Ahhh, good old Milberg Weiss. They're the moral equivalent of ambulance chasers in the securities law field.


--

One-Click Lawyer Retaining Patent? (5)

knarf (34928) | more than 13 years ago | (#513590)

Hmmm... Had a look at the second linked webpage. It contains some guff, followed by a bug button saying:

"Click Here to Retain Milberg Weiss"

Now there's a nice target for Amazon to sue... Or maybe they (milbergweiss) already have a patent for 'one click lawyer retaining'?

Sorry, I dislike lawyers and everything related to them. My parents taught me not to lie. Guess their parents did the same, but they obviously interpreted it as 'lie if the price is right'. 'Nuff said...

Click Here to Retain Milberg Weiss (1)

drivers (45076) | more than 13 years ago | (#513591)

I like the button on their site: "Click Here to Retain Milberg Weiss"... hehe, it's One-Click Lawsuits! (patent pending)

I can't even figure out what the problem is, and I read the complaint. It just goes to show (as I learned from reading Cryptonomicon) investors are looking for any technicality to use to file a lawsuit against you. Fucking greedy capitalists.

Goddamn Legalese (3)

susano_otter (123650) | more than 13 years ago | (#513597)

The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a class action lawsuit was filed on January 11, 2001, on behalf of purchasers of the securities of VA Linux Systems, Inc. (``Linux'' or the ``Company''...

Further reading of the article produces such phrases as "The action...[is pending]... against defendants Linux, Credit Suisse First Boston Corporation...

They're suing "Linux"?

'bout time (1)

RustyTaco (301580) | more than 13 years ago | (#513598)

I'm just amazed it's been this long before somebody sued them.

- RustyTaco
(notreally)rustytaco@kurodot.org

Fucking lawyers... (1)

supabeast! (84658) | more than 13 years ago | (#513603)

What this really means is...

- VA loses a ton of money fighting this.
- Milberg sues and, if they win, they get a ton of money out of what they get from VA.
- The investors each get a check for their tenth of a cent, the only money left after the Milberg assholes get paid.

Fuck lawyers.

Re:Goddamn Legalese (2)

supine (94843) | more than 13 years ago | (#513604)

To: support@milberg.com

From: marty@supine.xxx
Subject: VA Linux Press Release

Dear Sir/Madam

I refer to your press release on the VA Linux class action law suit you have posted to your website (http://www.milberg.com/valinux/) and which is featured at Yahoo! (http://biz.yahoo.com/bw/010111/ny_milberg.html).

I am concerned about your use of "Linux" as short hand for "VA Linux" as it is possible this may create confusion. The term "Linux" refers to software (an operating system kernel) and people reading the press release may become confused between your use of the term as short hand and the software.

I would urge you to edit the press release so that short hand references to VA Linux all use the term "the Company" to avoid such confusion.

Yours Sincerely,
Martin Barry

What have you done for the community today?

Re:what it means... (5)

Luddite666 (168437) | more than 13 years ago | (#513605)

After a quick read of the complaint, in my interpretation, what the lawsuit is trying to say is:

1. There was something like a 'friends and family' program with the VA Linux IPO, where certain people got shares of VA Linux at the IPO price (this is common in IPOs).

2. VA Linux's underwriter, Credit Suisse ('CS') had a 30-day option to sell even more shares of VA Linux at the IPO price, up to 15% of the number of shares in the original IPO (this is also common in IPOs; the underwriter generally exercises the option and sells the shares if the IPO is a hot one).

3. The complaint basically says that these 'friends and family' shares and option shares were sold by CS to certain people in ways that gave CS extra benefits, hurting investors who could not buy these shares at the IPO price from CS.

4. This has been a sore topic for the SEC lately, where certain people get shares at the IPO price, and then can turn around and tell them immediately after the IPO, turning a very large profit, quickly.

5. It really has nothing to do with VA Linux itself, other than the mechanics of VA Linux's IPO.

6. This is a personal interpretation, not a legal opinion.

Relax. This is not a problem (2)

Chuck Flynn (265247) | more than 13 years ago | (#513606)

From a ZDNet article on the subject:
Lawyers who represent Wall Street firms have argued that even jumbo commissions may have been legal in the context of the overall relationship between the investors and the securities firms; they say the securities dealers have wide discretion to allocate IPO stock as they see fit in order to manage the offerings.

These sorts of shenanigans have been going on for years precisely because they're not actually shenanigans: they're just a normal part of the process. When you start a company, it's your business whom you pick to be your partners. It's the same with initial public offerings, except those are even more democratic in nature.

When Redhat went ipo, plenty of people active in the opensource movement got a special offer to join the IPO, and slashdot was abuzz with the excitement of it all. This with VaLinux is just another kind of special offer. Nothing to see here; move along.

Re:Goddamn Legalese (2)

shepd (155729) | more than 13 years ago | (#513607)

You forgot (and so did they -- at leat on the press release) to mention that Linux is a trademarked name, owned by Linus Torvalds.

He might have a case against them. :-)

Re:I do not speak legalese (1)

RickG485 (169326) | more than 13 years ago | (#513608)

What's up with listing "Linux" as the offending party? I didn't know intellectual property could handle an IPO.

Seriously, reading the Milberg suit, it alleges that VA and the financiers taking them IPO lied on the Prospectus saying that Credit Suisse (the bank doing VA's IPO) purposefully played the deal that was set up for the public by giving certain investors special, I guess illegal access, to what stock was to be sold (apparently certain parts of the stock were supposed to be off-limits and weren't), making a mint from the extra these certain investors payed for these illegal stocks. So apprantely they are alleging this some kind of fraud.

What I don't get is what this has to do with VA. The text of the suit seems to put the blame on the shoulders of Credit Suisse. How can VA be held for Credit Suisse's dirty deal other than VA published the prospectus that screwed people up. Keep in mind IANAL of course.

Re:link (2)

interiot (50685) | more than 13 years ago | (#513609)

*gasp* You mean, they took the time to research/confirm the story first?

(but only when it affects their wallets)
--

Duty of care (2)

QuantumG (50515) | more than 13 years ago | (#513610)

so this has nothing to do with Slashdot's duty of care its cronically addicted posters [slashdot.org]? ok, just checking.

Re:I do not speak legalese (1)

tbannist (230135) | more than 13 years ago | (#513611)

I'm partially fluent in Legalese, it seems to say (Really, really simplified):

Credit Suisse manipulated the stock price of VA Linux and make themselves several tons of cash.

The lawsuit was prompted by the results of a Federal Investigation of Credit Suisse and a number of suspicious circumstances surrounding the high-tech IPO's they've underwritten.

Re:These guys sue everybody (1)

normiep (68432) | more than 13 years ago | (#513612)


Well technically you are right... but if they have such a long and undistinguished history of pushing many of these kinds of cases, they probably track down companies that are potential targets and then contact the people who actually can sue and try to convince them to file.

Bad press for Linux in general (1)

rice_burners_suck (243660) | more than 13 years ago | (#513613)

From the press release:

The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a class action lawsuit was filed on January 11, 2001, on behalf of purchasers of the securities of VA Linux Systems, Inc. (``Linux'' or the ``Company'') (NASDAQ: LNUX - news) between December 9, 1999 and December 6, 2000 inclusive.

This is bad press for the Linux community in general, because the company is called VA Linux Systems and they are being addressed simply as "Linux." (It's only bad because most non-technical people probably don't know that Linux isn't owned by a company. The name VA Linux and the symbol LNUX probably don't help.)

In connection with the recent /. story "Ballmer Claims Linux Is Top Threat To MS" [slashdot.org], I'm sure the folks over in Redmond are having a good chuckle over this one.

Re:I do not speak legalese (1)

momguy (302416) | more than 13 years ago | (#513614)

Dude, this happens every day! The law suits too! If you owned a company, wouldn't you snag up all the choice stock, inside tips, and backdoor advantages you could??? The only reason we know or care about this instance is that it happened to VA Linux which Taco is involved with and is a frequent topic of discussion on ye 'ol Slashdot!

what it means... (5)

swingkid (3585) | more than 13 years ago | (#513618)

From what I gather, the underwriters (Credit Suisse) were paid to pre-allocate IPO shares to certain investors, and also made quid pro quo deals, where investors were allocated IPO shares in exchange for guaranteeing that they would buy shares at a certain price at a later date. I'm hazy on the SEC rules regarding the first allegation, but I'm pretty sure the second point constitutes illegal price fixing, and is quite verboten. Could be wrong, tho.

some reasonable facsimile (1)

Anonymous Coward | more than 13 years ago | (#513619)

try /dev/random

Translation? (1)

MrBud (261721) | more than 13 years ago | (#513626)

Would someone be so kind as to explain exactly what the hell all that legal jibberish means?

Re:Goddamn Legalese (1)

Faulty Dreamer (259659) | more than 13 years ago | (#513630)

The great thing here is that (if MS is not already involved in some way with this) Microsoft will bring this up left and right and say that everyone that bought Linux (carefully neglecting to mention VA and stock) should be seeking damages.

OK, enough of the conspiracy theory. It does however, really, really bother me that they chose to use Linux as an abreviation for VA (which is what most people use as an abbreviation for VA Linux). It really makes me wonder if there isn't an ulterior motive/motivator behind the scenes saying, "Hey, this would be some nice nasty press about Linux!" But, even if that isn't the case, it is something that I hope they have the decency to correct when the large number of slashdotters tell them (probably not so politely, but since when did law firms deserve to be addressed politely?) that Linux isn't actually a good abbreviation of VA. But if they insist that Linux is the proper abbreviation and get real belligerant about it, then I might think that my original conspiracy theory wasn't that far off the mark.

putting VA's IPO in perspective (2)

flavor (263183) | more than 13 years ago | (#513634)

to give you an idea of just how fantastically successful VA's IPO was, just let me say this:

according to Bloomberg analytics, VA had the best first-day performance of any IPO during Q4 99. they beat out 160 other IPOs for the largest first-day gain of 797% (from IPO price of 30 to close at 239 1/4). and it went even higher, to 252, in after-hours trading that day.

so i don't find it tough to believe that funny stuff was going on.

-----

Re:craziness (1)

Anonymous Coward | more than 13 years ago | (#513635)

as a lawyer representing millions of concerned lawyers around the world, I am initiating a class action lawsuit to the tune of 7.8 billion dollars against you for mental anguish caused by your obvious lack of respect for us, please pay up now or we will be forced to release the hounds

There's a nice change (2)

RollingThunder (88952) | more than 13 years ago | (#513642)

Now VA Linux is being called "Linux", rather than Red Hat. I was getting tired of RH == Linux and vice versa!

These guys sue everybody (5)

davebo (11873) | more than 13 years ago | (#513646)

Milberg Weiss Bershad Hynes & Lerach LLP of New York, NY have a long and not so distinguished history of dropping the class action bomb on any and every company whose stock drops by more than a certain percentage in a (relatively) small amount of time. They particularly like going after internet/tech companies (mmmm . . . volatile stock prices . . .. mmmmm). Just try a search for them at the Securities Class Acton Clearinghouse [stanford.edu].

Bloody leaches.

Don't give it much credence (1)

vectro (54263) | more than 13 years ago | (#513649)

Considering their press release seems to think they were screwed out of shares of "Linux", I wouldn't exactly call these people clueful.

Most likely it is a law firm that starts class action suits for stocks that don't go up. Class actions are a bonanza for the prosecuting firm, even if the charges are baseless. They almost always settle.
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