A shareholder suit has been filed in U.S. District Court in Ohio over allegations that the online service failed to notify investors of adverse trends in the market when taking the company public.
Those trends included the industry's move toward unlimited flat-rate fees to attract consumers. The stock, which was priced at $30 when the company issued 18.4 million shares last April, today trades at roughly half that.
The lawsuit, which charges securities law violations, names CompuServe; its officers and directors; its majority shareholder, H&R Block; and underwriters Goldman, Sachs, George Baum, Merrill Lynch, and Pierce Fenner.
The case is similar to a suit last July, also filed in U.S. District Court in Ohio, by Strauss & Troy, Milberg Weiss Bershad Hynes & Lerach, and Wolf Haldenstein Adler Freeman & Herz. The same firms are representing plaintiffs in the latest case.
Meanwhile, earlier this month, the board of a Florida pension fund filed a shareholder suit against CompuServe. The shareholders alleged in this case that the company made "materially false and misleading statements" regarding its defunct consumer service, Wow. CompuServe abandoned Wow to return to its core focus on businesses.
CompuServe representatives and lawyers for the plaintiffs were not available for comment.