theStreet.com: Shareholders Sue VA Linux As IPO Practices Are Called Into Question

“The piling on is under way for VA Linux, the software company
that became a symbol of the initial public offering craze a year
ago. It’s now threatened with becoming a poster child for
everything that went wrong with late 1990s IPOs.”

“Since late January, at least 18 federal lawsuits have been
filed against VA Linux, claiming the Fremont, Calif.-based company
conspired with its investment bankers in a kickback scheme to drive
up the price of its shares in what was the largest percentage gain
in at least a decade for a stock in its first day of trading. Those
suits, which seek certification as class actions, also name the
lead underwriter of the VA Linux IPO, Credit Suisse First Boston,
as a defendant….”

“And now, VA Linux has been roped into a larger investigation by
the Securities and Exchange Commission of the practices of
investment banking firms in a number of initial public offerings,
centering on how the banks allocated the prized IPO shares and what
they may have demanded from the recipients of the shares in
return.”

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