CNET también está disponible en español.

Ir a español

Don't show this again

Tech Industry

Award ordered in case

An arbitration panel has ordered the underwriters of the beleaguered online commerce company to pay $400,000 for inflating's stock price.

    An arbitration panel has ordered the underwriters of beleaguered to pay $400,000 for inflating the stock price of the online commerce company.

    The panel, convened by the National Association of Securities Dealers' (NASD) office of dispute resolution, ordered Irvine, California-based Waldron & Company and Los Angeles-based Wedbush, Morgan Securities to pay the combined damages.

    The award, also levied against Waldron executive Cery Perle and financier Ed Harris, will be paid to Fiero Brothers, a New York City brokerage house that had complained about fraud and excessive markups in the sale of's stock to the public. Fiero had asked the arbitration panel for an award in excess of $4.25 million from the underwriters., based in Corona del Mar, California, was not a party to the dispute.

    Representatives from Waldron and Wedbush were not available for comment today.

    Handed down on Friday, the panel's ruling is only the latest wrinkle in's short but checkered history. Backed by Idealab entrepreneur Bill Gross,'s initial public offering was an overnight success, selling in November for $9 per share and soon trading as high as $39 per share.

    But's boom did not last. In March, the Securities and Exchange Commission suspended trading of for two weeks, citing a "lack of current and accurate information regarding the securities." In the last few months,'s stock has plummeted, and in April shareholders sued the company for alleged stock fraud. closed yesterday at 1.598.

    Waldron and Wedbush, which underwrote's initial public offering, are not the only ones of accused of wrongdoing, however. In a lawsuit filed in April, Waldron claimed that five of its former employees "knowingly and willfully conspired" with John Fiero, president of Fiero Brothers, to drive down the price of

    According to the suit, filed in Los Angeles Superior Court, Fiero was a short-seller of, meaning that the brokerage stood to profit if the Internet commerce company's stock price declined. What's more, Waldron claimed, Fiero has a tainted past of its own.

    "The Fiero Brothers are notorious short-sellers who are currently under regulatory investigation in connection with the demise of Hanover Sterling and its clearing broker, Adler Coleman," Waldron's suit charges. "In those proceedings it is alleged that the Fiero Brothers engaged in wrongdoing involving violation of the securities laws, including efforts to defame and depress the stock of target companies."

    Despite those allegations, Fiero Brothers was not named as a party to the suit.

    "The accusations made in that suit are specious, meritless, and frivolous," said Martin Russo, an attorney for Fiero Brothers. He added that Waldron had lodged similar accusations in a counterclaim before the NASD arbitration panel, which dismissed them in their entirety. "We already went before a panel and proved to them that it didn't happen."