UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
CHANG QING CAO, on behalf of himself and all
others similarly situated,
CIVIL ACTION NO.
Plaintiff,
CLASS ACTION COMPLAINT
v. FOR VIOLATIONS OF FEDERAL
SECURITIES LAWS
RHYTHYMS NETCONNECTIONS INC;
CATHERINE HAPKA; SCOTT CHANDLER; JURY TRIAL DEMANDED
B.T. ALEX. BROWN, INC.; FLEETBOSTON
ROBERTSON STEPHENS, INC.; J.P. MORGAN
CHASE; LEHMAN BROTHERS, INC.;
MERRILL LYNCH, PIERCE, FENNER &
SMITH, INCORPORATED; THOMAS WEISEL
PARTNERS LLC; and SALOMON SMITH
BARNEY, INC.,
Defendants.
Plaintiff, individually and on behalf of all other persons similarly situated, by
attorneys, for plaintiff's Complaint, allege upon the investigation made by and through plaintiff's
which included, inter alia, a review of relevant filings made by Rhythym NetConnections Inc.
or the "Company") with the Securities and Exchange Commission, as well as, tele-conferences, press
releases, news articles, analyst reports, and media reports concerning the Company. Furthermore,
complaint is based upon plaintiff's personal knowledge as to plaintiff and plaintiff's own acts,
information and belief as to all other matters, based upon the aforementioned investigation.
NATURE OF THE ACTION
1. This is a class action on behalf of all persons, other than defendants and
parties, who purchased, converted, exchanged or otherwise acquired Rhythyms common stock, as
defined below, including, but not limited to, during the period from April 6, 1999 through December
2000 (the "Class Period") to recover damages caused by defendants' violations of the federal
law.
SNIPPETS:
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
BROWN, INC.; FLEETBOSTON ROBERTSON STEPHENS, INC.; J.P. MORGAN CHASE; LEHMAN BROTHERS, INC.;
Plaintiff, individually and on behalf of all other persons similarly situated, by plaintiff's
which included, inter alia, a review of relevant filings made by Rhythym NetConnections Inc.
or the "Company") with the Securities and Exchange Commission, as well as, tele-conferences,
releases, news articles, analyst reports, and media reports concerning the Company.
This is a class action on behalf of all persons, other than defendants and certain related
2000 to recover damages caused by defendants' violations of the federal securities
alleged malfeasance by major Wall Street securities firms.
investment banks charged issuers of new securities excessive commissions and inflated
Second, investigators are examining, and have evidence, that major investment banks
exchange for promises by these customers that they would purchase additional shares of the
after-market, thereby inflating and maintaining the market price for the IPOs.
participation in the IPO market and after-market trading.
inflation in the IPO stock price, above the offering price, and create a false sense of
obtain allocations of stock on the offering - - but before the first after-market trade.
Securities Act of 1933 15 U.S.C. '' 77k, 77land 77o and Sections 10and
including the preparation and dissemination in this judicial district of the Prospectus
shareholders of defendants Rhythyms, which documents were materially false and misleading,
Class Period (including the trading of Rhythyms stock based upon misleading information).
underwriter defendants conduct substantial business in this district.
control to cause the Company to engage in the violations and improper practices complained of
Defendant Salomon Smith Barney Inc. (hereinafter referred to,
and/or managing underwriter of the Rhythyms initial public offering of 9,375,000 shares of
Manipulated Securities omitted and/or misrepresented material facts about the offering of
In direct contravention to Rules 101 and 102 of Regulation M of the Exchange Act,
direct participation and agreement of Rhythyms and the Individual Defendants.
violation of Regulation M, which governs market manipulation.
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