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Spector, Roseman & Kodroff, P.C. Announces Class Action Suit Against VA Linux Systems

Jan 19, 2001, 00:03 (4 Talkback[s])

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"The following statement was issued today by the law firm of Spector, Roseman & Kodroff, P.C.:"

"Notice is hereby given that a class action lawsuit was filed in the United States District Court for the Southern District of New York on behalf of all persons who purchased the common stock of VA Linux Systems, Inc. (``VA Linux'' or the ``Company'') between December 9, 1999 and December 6, 2000, inclusive (the "Class Period")."

The complaint alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On December 9, 1999, Linux completed an initial public offering of 4.4 million shares of its common stock at an offering price of $30 per share (the "Linux IPO"). In connection therewith, Linux filed a registration statement, which incorporated a prospectus (the "Prospectus"), with the SEC. The complaint alleges that the Prospectus was materially false and misleading because it failed to disclose, among other things, that: (i) Credit Suisse had solicited and received excessive and undisclosed commissions from certain investors in exchange for which Credit Suisse allocated to those investors material portions of the restricted number of Linux shares issued in connection with the Linux IPO; and (ii) Credit Suisse had entered into agreements with customers in which Credit Suisse agreed to allocate Linux shares to those customers in the Linux IPO in exchange for which the customers agreed to purchase additional Linux shares in the aftermarket at pre-determined prices. As alleged in the complaint, the SEC is currently investigating underwriting practices in connection with the Linux IPO."

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