Vonage Holdings Corp., the Internet telephony company whose shares have plummeted since its IPO last week, has responded to yesterday's
Wall Street Journal story, claiming it will pursue legal
action against customers who promised to buy shares that don't come good on their pledges. Yesterday, the
Journal reported that Vonage, through its SEC filings, decided to take on the risk of a
customer IPO share purchases itself, meaning the VoIP firm--not its underwriters--will be solely responsible for collecting funds from customers who default on their promise to buy shares at the
initial share offering price of $17. The move to allow customers to buy into Vonage's IPO was a strange one that was made all the stranger by the fact that the company absolved its underwriters from
any responsibility to collect from its customers. Vonage says it will hold these customers responsible if they decide not to pay, but it's highly unlikely the ailing company has the resources to
pursue 10,000 customers who signed up to buy 4 million shares of company stock. Meanwhile, some customers have said they won't pay because Vonage's stock price has tanked instead of rising after its
IPO, losing 30 percent of its value in its first week of trading.
Read the whole story at Wall Street Journal »
