A class action suit has been filed in the U.S. District Court for the Southern District of New York against some of the underwriters of the Radware (Nasdaq: RDWR ) issue, on behalf of all persons and entities who purchased, converted, exchanged, or otherwise acquired the common stock of Radware.
Salomon Smith Barney, US Bancorp Piper Jaffray, Bank of America (Banc of America Securities LLC), FleetBoston Robertson Stephens, Goldman Sachs Group, and SunTrust Capital Markets (SunTrust Robinson Humphrey Capital Markets) are named as defendants.
The lawsuit alleges that the defendants allotted shares to certain investors at Radware's IPO price of $18 on the condition that the investors make additional purchases of shares at progressively higher prices after the IPO, in order to artificially raise the share price. The lawsuit alleges that the IPO underwriters and their customers named as defendants in the suit reaped enormous profits by buying Radware stock at the $18.00 IPO price and then rushing to sell it later at inflated prices. The share price rose as high as $49.00 during its first day of trading.
The lawsuit further alleges that the defendants kept the share price at artificially high levels in order to hold a secondary offering at $51.75 per share.
On its first day of trading, Radware reached $27.50, and reached $80 at its peak. Yesterday, Radware was priced at $10.95, reflecting a market value of $180 million.
Radware CFO Meir Moshe told "Globes", "The lawsuit has nothing to do with Radware itself." Moshe said the lawsuit is part of a wave of lawsuits now being filed on Wall Street against underwriters over their actions during the wave of issues in 1999-2000.
Moshe emphasized that no lawsuit had been filed against Radware itself.
Published by Israel's Business Arena on 5 December 2001