Potential for a class action lawsuit - in an IPO scam?

[Must_B_Free]

Anyone know if there's potential for a class action lawsuit in this scenario:

I worked for Company X, who offered a regular salary and stock options in their upcoming IPO. The audit before going public was done by Auditor A. I was told that we had to demonstrate to the Auditors that the books were capable of being balance legitimately, or they could never take the offering public. I worked in an area related to building the program that was part of balancing the books and I know that the system to do such was never completed, but they went public with the stock offering anyway.

They blasted all the investors into the infrastructure and burned through the cash in 2 years. Then they fired half to company to reach cashflow breakeven and the owner, who was the majority shareholder, bought back all outstanding shares for a little over 1 penny on the dollar of the original strike price, and took the company private again.

Was there a crime committed in never actually completing the application to balance the books? What happened was they would just pay whatever bill the distributers sent them, and never actually matched them against actual shipments. When we spot checked, we could see that in some cases we were being billed multiple times for the same shipment.

Did Auditor A pull any illegal activites. The IPO was done by Financial Instution M. Did I get ripped of with options in a fraudulenty presented stock?

[MidwestTransplant]

1. Try giving these guys a call

I know they do tons of cases. Don't know if that will be helpful in your instance since it sounds like your claim (and others like you) seem different than the general shareholder so your claim may not be big enough for them. Give it a try though.

http://www.milberg.com/mil-cgi-bin/mil?templ=home.html

[Must_B_Free]

4. My take is that what I know

makes me think the investors were defrauded. I feel that I was one of those investor since I was working, in part, for stock options.

[jiacinto]

2. Stay out of it

First of all I would never have posted this information at DU, as someone at your workplace could conceivably find this post here. Have you ever used DU at the office? If the answer is yes then that means that the IT person could easily find out what web sites you've visted, what emails you've sent, and what you've said. They could use that against later.

Secondly, before becoming a whistle blower, let me tell you what you are going to be up against. Most likely, when you took this job, you signed a confidentiality agreement. And the company could very well argue that your posting that information breached that contract. On top of it you could very well lose your job and be blacklisted from future employment in your field.

Most employment, the vast majority of jobs, are "at will". That basically means that they can fire you whenver they want to. In your employment contract there was probably a statement that said something to the effect of "employment at XYZ Corporation is at will. The management of XYZ Corporation reserves the right to terminte your employment at will at any time for any reason with or without warning. You, the employee, may also terminte your employment with XYZ Corporation at any time for any reasons with or without warning". So that means that they can fire you if you become a "problem" in their eyes. And winning unfair terminiation suits is very hard. They will then claim and manipulate your record by stating that you were "fired" because your performance wasn't "up to par" (even though you were doing your job they will find one blemish or technical violation of the rules and stick it to you). So it can get very nasty.

And then your former employer could very well call other people or companies telling them that you are a "troublemaker". You may very well never be able to find work again in your field or career.

I would be very careful before trying to become a "hero". These folks WILL fight back and it could get ugly. You will have to probably hire a laywer and incur significant legal fees accordingly. Also, if you do report them, you never how people will react. I am not trying to scare you, but pushing this issue further could very well make life very difficult for you.

Think about this clearly before you do anything. I just don't want you to be in a difficult position.

[Must_B_Free]

3. I don't work there anymore

so I'm not worried about losing any job. Does that make it less of a risk?

[jiacinto]

5. No it doesn't

becuase most likely you signed a "confidelity agreement" when you signed your employment contract. That means that they could conceivably claim you breached it if you report them. I am not an employment attorney by far but I am just telling you what may happen.

Also, if it is the same industry where you are now, they could very well try to blacklist you.

If you do have proof of fraud I would be very careful before I told anyone. And I would definitely make sure that it is a clear violation.

You have a lot to lose by coming forward. I just want you to make sure you know what the risks are.

[Must_B_Free]

6. Maybe I got ahead of myself:

I'll remove the auditor name so this is more in the hypothetical. My question really is: was a crime committed?

I guess it would take someone who understands the laws of IPOs to determine if there was any legal wrong doing.

But from what I have described - taking a company public which blindly pays invoices - is that legal, or would laws have had to have been overlooked to do this?

[jiacinto]

7. It sounds fishy

But I am not an attorney who deals with securities law, so maybe there is a DUEr who is a lawyer who specializes within that field? What I do want you to know, though, is that if something is amiss here, and you do report it, things might get very difficult for you and your family.

[Must_B_Free]

9. Probably wouldn't want to mess with the careers of my

friends who are still employed for this company. That would be the foremost reason not to pursue it.

[jiacinto]

10. Just think it thoroughly through

before you do anything.

[Andy_Stephenson]

8. You cannot use the law to cover

yourself if you break the law.

[MidwestTransplant]

11. I am not an 100 % sure but I am quite sure that

if information is divuldged in a lawsuit you filed because you have been wronged you are in no way in violation of a confidentiality agreement. This person is claiming her former employer broke federal securities law.

[jiacinto]

12. I don't know for sure

But it could come into play. Whaterver this person does, if he/she does come forward, things could get very nasty.

[Eloriel]

13. Please don't take the advice here

You need to talk to an attorney, and you've not had any attorneys responding to you just yet. And please don't take the advice of DUers who above all else like to protect those in power.

I'm not an attorney either, but sure sounds like a good case to me.

Good luck.

Eloriel

[jiacinto]

14. What a snide post

You are insulting me indireclty here. But what else is new?

All I was telling the poster is to talk to an attorney. I was also telling him the risks that come with being a whistle blower.

And the idea that somehow I "am defending the company" is offensive because I am not. I am not defending this company's alleged illegal conduct.

But the fact is that being a whistle blower carries lots of risks to it. I was only telling the original poster what they must be.

Your snide personal attack against me is insulting.

[Loyal]

15. The fact

that you think this is a "good case" is most disturbing. This is why it's a good thing you're not an attorney.