The past caught up with the new chief executive of Vodafone, Arun Sarin, yesterday as details emerged of litigation faced by the Indian-born American businessman from his time in the dotcom industry.
A US law firm last summer began a class action suit against internet communications firm InfoSpace, which Sarin ran for nine months from April 2000. The suit alleges that the company concealed its operating performance to support the share price.
The case is being fought by Wolf Haldenstein Adler Freeman & Herz – which has more than 300 class action suits pending in US courts including cases against Vodafone and Marconi – on behalf of InfoSpace investors who believe they lost out when the company’s stock fell sharply during the dotcom crash.
The complaint alleges that between January 2000 and January 2001 Nasdaq-listed InfoSpace ”disseminated false and misleading information concerning actual full year 1999 and 2000 financial performance and … expectations concerning InfoSpace’s 2001 revenue and earnings.”
The lawsuit goes on to allege that public representations made by InfoSpace’s directors were designed to allow the company to continue to use its shares to make acquisitions and enable the founder and former chief executive, Naveen Jain, to sell stock.
InfoSpace filed a motion in July to have the case, which is before the US district court in Washington, dismissed. The judge has yet to rule.
Vodafone said yesterday that a full check had been run on Sarin, who is already serving as a non-executive director of the mobile phone company, before his appointment to replace Sir Christopher Gent was made public. During his time at InfoSpace had Sarin sold no shares in the company.
Wolf Haldenstein Adler Freeman & Herz is one of several US law firms to have seen a dramatic increase in litigation by investors following the bursting of the internet bubble. – Guardian Unlimited Â