Electronic news delivery service Individual and its ousted former chief executive Yoshi Amram are being sued in federal court by shareholders claiming that the company did not adequately inform them of disputes between board members and Amram.
The class action suit was filed yesterday in U.S. District Court in Massachusetts by two stockholders, who together hold 14,000 shares in the company.
The suit maintains that Individual in a prospectus filed prior to its March initial public offering made misstatements, or failed to make statements, regarding conflicts between the company's board members and Amram over future direction of the company.
The shareholders are seeking "monetary damages for the diminished value of the stock," said Robert Lentz, chief financial officer and vice president of finance at Individual.
The shareholders who brought the case are also suing on behalf of other shareholders who bought the company's common stock between March 15 of this year--five days before the initial public offering--and July 24-- two weeks before Amram left.
Individual sold 2.5 million shares for $14 each in the initial offering.
Lentz said that the stock was trading at a high of $22 per share this spring, before falling to around $6 per share by July. The stock is currently trading at slightly less than $6 per share.
Individual denies any wrong doing. "The allegations in the complaint are without any merit," the company said in a statement, adding that it "intends to vigorously defend against them."
Amram, who was ousted this summer from his post as chief executive officer, is one of several former and present directors and officers of the Burlington, Massachusetts-based company that are named in the case.
Amram, the company founder, was abruptly forced out in August after an acrimonious dispute over the pace of future acquisitions. Immediately after his ouster, Amram, who still sits on the board and reportedly holds a 10.7 percent stake in Individual, said he would request that an independent committee evaluate the performance of remaining board members.
Former AT&T New Media chief executive Michael E. Kolowich, replaced Amram this fall as president and CEO.