A class action suit has been filed against Bidz.com, on behalf of purchasers of its common stock, charging it and its chief executive with violations of the Securities Exchange Act of 1934, a statement from the plaintiff’s law firm said.
The complaint alleges that during the class period, defendants issued a series of false and misleading statements intended to project the picture of a financially sound and well-operating company, when, in fact, the company was operating with material deficiencies and undisclosed substantial problems that went to the heart of its business model.
On November 26, 2007, a Citron Research article identified numerous alleged “red flags” and revealed previously undisclosed material problems with the company, the statement said. Two days later Citron issued a second article that provided additional details, revealing, among other things, that the company allegedly engaged improper business tactics in order to artificially raise the auction price of its products, the statement said. On this news, the Company’s stock price dropped from a closing price of $19.94 on Friday, November 23, 2007, to a low of $10.10 on November 28, a loss of nearly 50%.
The plaintiffs seeks to recover damages on behalf of all purchasers of common stock of Bidz.com during the class period. The plaintiff is represented by Barrack, Rodos & Bacine.
For more background on some of the controversies regarding Bidz.com, read JCK’s “Bidz: The Next Blue Nile?