Lawsuit Filed Against Palm for Stock Price Manipulation

A securities class action lawsuit was filed on behalf of everyone who acquired Palm, Inc. common stock between March 1, 2000 and December 6, 2000. The suit alleges that Palm executives and the companies that did underwriting for Palm's IPO conspired together to artificially drive up the price of Palm's shares.

The complaint alleges that, in exchange for the excessive commissions, members of the underwriting brokerage companies sold Palm stock to customers at the IPO price of $38 per share. To do this, the underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices.

The requirement that customers make additional purchases at progressively higher prices as the price of Palm stock rocketed upward (a practice known on Wall Street as ``laddering'') was intended to (and did) drive Palm's share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the underwriters and their customers to reap enormous profits by buying stock at the $38 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $165 on March 2, 2000, its first day of trading.

Named as defendants in the complaint are Palm and Carl Yankowski and Judy Bruner, who are executive officers of Palm. The complaint also names as defendants the following underwriters of Palm's initial public offering: Morgan Stanley & Co. Incorporated, Goldman Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith, Incorporated, FleetBoston Robertson Stephens, Inc., and Salomon Smith Barney, Inc.

The case is pending in the United States District Court for the Southern District of New York and has been assigned docket number 01-CV-5923. A copy of the complaint is available from the Court or from Bernstein Liebhard & Lifshitz, LLP (800-217-1522).

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December 6, 2001???

I.M. Anonymous @ 7/7/2001 12:08:57 PM #
whoops

RE: December 6, 2001???
Ed @ 7/7/2001 12:23:35 PM #
Funny, that's actually the date on the announcement from the law firm. When I checked back they had issued an updated statement with the correct date on it.

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Palm Infocenter

Nothing unusual

I.M. Anonymous @ 7/7/2001 12:38:01 PM #
These lawsuits are 10 a penny. Find any stock that flew up and then came down, and you'll find apparent ambulance chasing law firms looking to make a buck, and stupid investors not willing to take accountability for a bad decision ready to join up. This suit may be justified - I have no idea - but it's not unusual in today's equity world.

RE: Nothing unusual
I.M. Anonymous @ 7/7/2001 1:53:02 PM #
I hear there are many tech workers in general who are 'upside down' in their options meaning the current price isn't enough to pay the tax on the options when exercized.

RE: Nothing unusual
I.M. Anonymous @ 7/7/2001 2:02:13 PM #
I work for a tech company that has been the subject of a similar lawsuit. The ONLY people that win in this situation are the lawyers.

As far as stock options, I have over 20,000, and only a few thousand are "above water". The rest are so far underwater that there is no hope of them ever doing me any good.

RE: Nothing unusual
I.M. Anonymous @ 7/7/2001 8:00:28 PM #
That was ugly, you bigot.

RE: Nothing unusual
I.M. Anonymous @ 7/7/2001 8:54:50 PM #
Definitely below the belt.

RE: Nothing unusual
I.M. Anonymous @ 7/8/2001 1:12:26 AM #
It's not my website, but I see no reason not to remove that post.

RE: Nothing unusual
I.M. Anonymous @ 7/8/2001 2:19:37 AM #
Agreed.

RE: Nothing unusual
Admin @ 7/8/2001 11:20:37 AM #
I agree, bigotry will not be permitted in the comments in any form.

The said comment was removed as soon as it was noticed.

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webmaster@palminfocenter.com

RE: Nothing unusual
I.M. Anonymous @ 7/11/2001 9:02:54 AM #
Investors are not going to put themselves through the pain of a legal suit unless they are genuinely aggrieved. If so, then the shysters would be performing a public service. Not all legal cases are totally unfounded. (Mr Gates may have a different view.)

RE: Nothing unusual
I.M. Anonymous @ 7/11/2001 9:17:21 AM #
This is the last thing that Palm needs. Now, more than ever, their management needs to keep their eye on the ball. This case may use up a low of time and effort that would be better spent elsewhere. Let's hope nothing comes of this.

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