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Thursday, February 19, 2004 - Page updated at 12:00 A.M.
InfoSpace settles class-action suit with shareholders
By David Heath
The lawsuit, filed in 2001, accused the company of giving false and misleading information about the company's financial performance, causing the stock to sell at inflated prices through most of 2000 and early 2001.
However, InfoSpace says that despite the settlement agreement, it admits doing nothing wrong.
"From the company's point of view, this is a good settlement that put the case behind it and eliminated the burden and the risk associated with any large lawsuits," said Steven Schatz, an attorney for InfoSpace.
InfoSpace, an Internet- and wireless-services company based in Bellevue, lost more than $30 billion in shareholder value from its peak in March 2000. Schatz said that was primarily due to the bursting of the Internet bubble.
The company has been at the center of controversy for years. At its peak, InfoSpace was worth more than Boeing. Its founder, Naveen Jain, claimed in 2000 that InfoSpace would become the world's first trillion-dollar company. But instead, the company's stock plummeted.
In late 2002, the board ousted Jain. He is currently appealing a $247 million judgment for illegal insider trading.
InfoSpace's insurance carriers will pay the entire settlement, which still needs the approval of a federal judge. A hearing is set for May 7.
InfoSpace's stock rose $2.86 to $38.11 on the news of the tentative settlement.
The $34.3 million will be paid to shareholders who provide proof of buying the stock between Jan. 26, 2000, and Jan. 30, 2001. The estimated average payment will be 19 cents a share before the deduction of fees and expenses.
One quarter of the settlement plus no more than $500,000 in expenses will go to the law firms that filed the suit. The lead firm was Milberg Weiss' San Diego office.
Different amounts will be paid, based on when the stock was purchased.
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