Yesterday we provided a quick summary of the Vonage complaint, together with a downloadable pdf of the entire complaint. Today we learn from Business Week's columnist Tim Mullaney that at least part of the complaint was based on a typo!
In federal court filings, plaintiff’s firm Motley Rice LLC claimed underwriters led by Citigroup took 17% of the $531 million deal as fees -- more than double the usual 7%. The charge was so shocking Motley Rice made it in bold italics: “Investors were willing to and did pay these large underwriting fees...because investors believed that such fees were being paid, in substantial part, to assure that the underwriters had conducted a thorough analysis of the transaction..
Invited to to explain their math, though, Motley Rice ‘fessed up to its own due-diligence slip: The charge was a typo. Underwriters were actually paid a little over 7%. Motley Rice insisted the goof won’t affect the case. “The whole gist is that the IPO was bungled,“ lawyer James E. Evangelista tried to explain. Oh sure.
Now, to be fair, the premium for due-diligence was a pretty small part of the complaint. But you can bet there's some associate down in South Carolina, where Motley Rice is based, putting together a resume right now.
Vonage Plaintiffs: They Don't Teach Spell-Check in Law School [BusinessWeekOnline.Com]