Virgin Mobile Sued by Shareholders

Lawyers for Virgin Mobile shareholders announced Thursday the filing of lawsuit on behalf of all purchasers of stock between October 11 and November 15. October 11 was the date of the company's Initial Public Offering, which the lawsuit claims misrepresented Virgin's financial status at an IPO in October.

Virgin Mobile is a provides prepaid and pay as you go wireless communication aimed at young people. The company has reported losses before, such as in the third quarter of 2006 when it posted a $5 million dollar loss.

The law Virgin Mobile is alleged to have broken comes from the Securities Act of 1933. Specifically, that at the time of the IPO Virgin Mobile failed to disclose an enlarged loss during the third quarter of 2007, that at the same time their expenses had risen significantly, and their subscriber growth had slowed.

Additionally, the complaint alleges that the company should have disclosed a lack of adequate internal and financial controls leading to the losses.Due to these failures to disclose the company had misrepresented itself when preparing a registration statement for the IPO. When a company conducts an IPO, a Registration Statement and Prospectus (or "Registration Statement") is filed with the Securities Exchange Commission.

At the time of the IPO, Virgin Mobile sold 27.5 million shares at $15.00 per share, resulting in $412.5 million for the company. Approximately one month later Virgin Mobile announced their data from the third quarter, which ended September 30, to the public. Investors were stunned with the $7.3 million loss reported, and the stock immediately began to lose value as heavy trading resulted. By November 29th the stock was down to $7.25 per share, and investors who bought at the IPO saw a loss of over 51%.

The class action lawsuit seeks to reclaim damages resulting from the shareholders' loss. Anyone who bought Virgin Mobile shares on or about October 11, 2007 through November 15, 2007 may be eligible to enlist in this class action lawsuit. Members of this class also have the option of signing on as a lead plaintiff until January 28. Lead plaintiffs represent typical members of the class can be called upon in court. Participation as a lead plaintiff has no effect on the share of the settlement awarded. The law firm handling is Schiffrin Barroway Topaz & Kessler, and offers more information on signing up for the lawsuit on their website.

Source:

Schiffrin Barroway Topaz & Kessler, LLP, Shareholder Class Action Filed Against Virgin Mobile USA, Inc. by the Law Firm of Schiffrin Barroway Topaz & Kessler, LLP