NEW YORK-Handspring’s handling of its initial public offering, which sold in June 2000, is under challenge in a class action lawsuit the New York law firm of Milberg, Weiss, Bershad, Hynes & Lerach LLP filed recently against it in federal court.
The complaint alleges that the prospectus for the IPO that Handspring filed with the Securities and Exchange Commission “was materially false and misleading because it failed to disclose” several important details. These included the allocation of significant portions of the IPO shares to be issued to “certain investors” in exchange for “excessive commissions.”
The lawsuit also charges that Handspring, in advance of the stock sale, committed shares of the IPO in a preferential manner to those buyers who committed to purchase additional Handspring shares at pre-determined prices in the aftermarket once the IPO began trading.
Credit Suisse First Boston, New York, was lead underwriter of the 10 million share Handspring offering, which priced at $20 on June 20, 2000 and began trading the next day at $27.
CS First Boston is one of at least six investment banks whose IPO allocation practices have come under investigation in recent months by the SEC, the U.S. Attorney’s Office in New York and the National Association of Securities Dealers.
During the second quarter of 2000, CS First Boston ranked first in IPO underwriting, having lead-managed deals totaling $11.2 billion, including Handspring’s. Last month, the investment bank dismissed three members of its Private Client Services Group, whose efforts resulted in the underwriting firm’s first-place ranking.
