CAR_Public/010427.MBX                C L A S S   A C T I O N   R E P O R T E R

                Friday, April 27, 2001, Vol. 3, No. 83

                              Headlines

ACCELERATED NETWORKS: Weiss & Yourman Initiates Shareholder Lawsuit
AUTONATION: California Gunderson Chevrolet Agrees to Pay $2,600,000
AVICI SYSTEMS: Decries Merits of Securities Class Action Suit
BRISTOL-MYERS: Gray Panthers Sue to Spark BuSpar Competition
GAS SUPPLIERS: Memo Surfaces Suggesting Arco Kept Gas Prices High

MARIMBA, INC.: Cauley Geller Files Shareholder Suit in New York
MERCK-MEDCO: Charged with Prescription Pricing Fraud & Racketeering
NETZERO, INC.: Milberg Weiss Files Shareholder Complaint in New York
NORTHWEST AIRLINES: Paying 3,700 Trapped Passengers $1,300 Each
NORTHWEST AIRLINES: EEOC Sues for Discrimination of Seizure Suffers

PENN TREATY: Cauley Geller Files Securities Fraud Suite in Pennsylvania
PHOTOWORKS, INC.: Reaches Accord on Film Marketing Complaints
TOBACCO LITIGATION: Attorney General Ashcroft Hasn't Decided Anything
VENTRO: Sirota and Lovell Firms File Shareholder Complaint in S.D.N.Y.

                              *********

ACCELERATED NETWORKS: Weiss & Yourman Initiates Shareholder Lawsuit
-------------------------------------------------------------------
Weiss & Yourman filed a class action complaint on behalf of all persons
who acquired Accelerated Networks, Inc., (Nasdaq: ACCLE) securities
between June 22, 2000 and April 17, 2001, inclusive.  The complaint
charges Accelerated Networks, Inc., and its top officers and directors
with violations of Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934.

Accelerated Networks develops and markets telecommunications products
that enable the bundling of voice and data services over a single
broadband access network.  The company's multi service broadband access
products are designed to allow its customers to efficiently and cost-
efficiently deliver and manage multiple voice and data services using
digital subscriber line (DSL), T1, NxT1, or DS3 technologies.

The class action complaint charges that Accelerated Networks and
certain of its officers and directors issued materially false and
misleading statements regarding the company in violation of the
Securities and Exchange Act of 1934.  The complaint further alleges
that the price of Accelerated stock was artificially inflated during
the Class Period, and as a consequence, members of the Class suffered
damages.

If you wish to discuss this action, contact Mark A. Gordon, Esq., at
Weiss & Yourman in Los Angeles at (800) 437-7918 or wyinfo@wyca.com


AUTONATION: California Gunderson Chevrolet Agrees to Pay $2,600,000
-------------------------------------------------------------------
AutoNation's Gunderson Chevrolet, in El Monte, California -- one of the
largest auto dealers in the Los Angeles area -- has agreed to pay $2.6
million in fines and restitution to settle complaints that it defrauded
and deceived about 1,500 car buyers.  The showroom will be closed-up
for six days and the Dealer's license will be placed on probation for
four years as part of a settlement with the California Department of
Motor Vehicles.   The dealership admits nothing.  The payment, it says,
is a settlement of administrative action brought by the California DMV
and a civil lawsuit filed by the Los Angeles County District Attorney's
Office.

As previously reported, the California DMV and the district attorney
alleged that over a 15-month period from February 1999 to May 2000,
Gunderson charged hundreds or thousands of dollars for a windshield-
etched security number that cost the dealership $37, charged for LoJack
security systems that were never installed, and added extended
warranties that customers had not agreed to buy.

The dealership has agreed to pay $1.5 million in restitution to 1,500
car buyers, an average of $1,000 each. It also will pay $1.1 million in
civil penalties and costs.  AutoNation maintains that Gunderson
dealership problems were carried out by rogue employees.


AVICI SYSTEMS: Decries Merits of Securities Class Action Suit
-------------------------------------------------------------
Avici Systems Inc. (Nasdaq:AVCI), learned of a shareholder class action
lawsuit filed against the Company in the United States District Court
Southern District of New York purportedly on behalf of purchasers of
the  Company's common stock during the period July 28, 2000 to April
20, 2001.  The complaint also names as defendants Morgan Stanley & Co.
Incorporated and certain officers of the Company. The complaint alleges
violations of federal securities laws regarding statements concerning
the underwriting of its shares to the public made in the Company's
initial public offering registration statement.

Avici Systems and its officers deny any liability in the litigation and
intend to vigorously defend the allegations against them.



BRISTOL-MYERS: Gray Panthers Sue to Spark BuSpar Competition
------------------------------------------------------------
The Stop Patient Abuse Now (SPAN) Coalition today announced that the
Gray Panthers filed a class action lawsuit against Bristol-Myers Squibb
for damages the company caused by delaying competition for BuSpar brand
buspirone, an anti-anxiety drug.

The suit is part of SPAN's new strategy to stop abusive practices by
drug companies that prevent competition.  SPAN engaged Washington, DC-
based Cohen, Milstein, Hausfeld & Toll to file the suit in the same
court that ruled last month against Bristol's actions.   The firm also
filed suits against Bristol on behalf of HIP Health Plan of Florida,
Inc., and Richard Levine, a buspirone user in Florida.

Consumers are tired of waiting for Congress, stated Tim Fuller, SPAN
founder and Executive Director of the Gray Panthers.  We're taking
matters into our own hands now, and we're not stopping until we get
reform.

A federal district court last month ordered Bristol to remove a patent
from the FDA Orange Book, which groups argued was intended to
unlawfully block sales of lower-priced generic buspirone.  SPAN
petitioned the FTC and several state Attorneys General to investigate
Bristol's actions.

SPAN asked Michael Hausfeld of Cohen, Milstein, Hausfeld & Toll to lead
the case against Bristol because of his reputation for using high-
profile litigation to force industry reforms.  The firm has led
successful class action suits against Texaco (race discrimination),
Exxon (Valdez oil spill), and Bristol (infant formula price fixing).

Congress needs to slam the door shut on abusive drug patent extension
schemes, stated Hausfeld.  Until that happens, consumers will protect
themselves in court.

SPAN members, including consumer, seniors, and AIDS groups from across
the nation, plan to join the Gray Panthers with additional suits.  Some
of the groups filed an earlier suit in New York to seek injunctive
relief, though after Bristol had already de-listed its patent as a
result of an order by the DC court.  The Gray Panthers suit is the
first ever by a consumer group to seek damages for unlawful drug
company actions that block generic competition. SPAN estimates that
Bristol's scheme cost consumers the opportunity to save over $100
million.

Bristol's actions were the last straw, stated Fuller.  Every
pharmaceutical company planning to use last-minute patents to delay
competition should now think twice.

Copies of the suit may be obtained by contacting Tim Fuller at
202-637-7737.  See http://www.SPANCoalition.org for more information.


GAS SUPPLIERS: Memo Surfaces Suggesting Arco Kept Gas Prices High
-----------------------------------------------------------------
Jim Barnett and Kim Christensen, writing for The Oregonian, relate that
Atlantic Richfield Co. planned to export gasoline in order to tighten
supplies and boost West Coast prices in the mid-1990s, according to a
memo to be made public today by Sen. Ron Wyden.  The memo, prepared by
a consultant to Arco, describes the oil company's manufacturing and
wholesale marketing strategy in 1995 and 1996, at a time when the
federal government prepared to lift a ban on exports of Alaska crude
oil and the gasoline made from it.  Wyden said he would introduce the
memo as evidence at a congressional hearing on the factors that push
West Coast gas prices higher than in other parts of the country. The
hearing was prompted by The Oregonian's report in January that
government experts concluded last year that BP Amoco had systematically
jacked up West Coast oil prices by exporting Alaska crude to Asia.

The Arco memo is further evidence that West Coast gas prices are as
much a function of corporate strategy as of other causes cited by
industry officials, including production shortages, state taxes and
pipeline failures, Wyden said in an interview Tuesday.

When you look at the Arco report, the Oregon Democrat said, it's clear
that their very business model, the essence of their business, was to
take advantage of the lifting of the export ban to manipulate supply
and stick it to people on the West Coast.

Paul Langland, a Los Angeles spokesman for BP Amoco, which acquired
Arco last year, said Arco had not engaged in anti-competitive
practices, manipulated West Coast supplies or inflated prices.  When
the consultant's report was written, he said, Arco did not produce
enough gasoline to supply its own stations, much less export
significant amounts.  It is highly unlikely that we would have sent
gasoline out of the market, Langland said. We were on the market on a
regular basis to buy gasoline to fulfill our customers' needs.

The Arco memo and accompanying testimony were culled from the files of
Aguilar vs. Atlantic Richfield Co. et al., a 1997 consumer class-action
suit that accused Arco and other California refiners of price-fixing.
A San Diego County Superior Court judge dismissed the case once for
lack of evidence but later reversed himself and reinstated it. The oil
industry appealed, and the California Supreme Court now must decide
whether it goes to trial.

Wyden provided portions of the memo to The Oregonian. Prepared by the
consulting firm Booz, Allen & Hamilton Inc., it describes Arco's action
plan to export to keep the market tight as part of maintaining balance
in the West Coast. Wyden said documents show that Arco not only
intended to export gasoline, but also engaged in other anti-competitive
practices. There is clearly a pattern of trying to avoid competition at
all cost, he said. The question is, is there a West Coast cartel where
companies in effect pretend to compete while they quietly go about
milking every nickel of profit at consumers' expense?


MARIMBA, INC.: Cauley Geller Files Shareholder Suit in New York
---------------------------------------------------------------
The Law Firm of Cauley Geller Bowman & Coates, LLP commenced a class
action proceeding in the United States District Court for the Southern
District of New York on behalf of purchasers of Marimba, Inc. (Nasdaq:
MRBA) securities during the period between April 30, 1999 and March 27,
2000, inclusive.

The complaint charges defendants Marimba, Morgan Stanley & Co.
Incorporated (Morgan Stanley), Credit Suisse First Boston Corporation
(Credit Suisse), Bear Stearns & Co., Inc. (Bear Stearns), Kim K.
Polese, Fred M. Gerson and Arthur A. Van Hoff with violations of
Sections 11, 12(a) (2) and 15 of the Securities Act of 1933 and Section
10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder.

On April 30, 1999, Marimba commenced an initial public offering of 4
million of its shares of common stock at an offering price of $20 per
share (the Marimba IPO).  In connection therewith, Marimba filed a
registration statement, which incorporated a prospectus (the
Prospectus), with the SEC.  The complaint further alleges that the
Prospectus was materially false and misleading because it failed to
disclose, among other things, that:

      (i) Morgan Stanley, Credit Suisse and Bear Stearns had solicited
          and received excessive and undisclosed commissions from
          certain investors in exchange for which Morgan Stanley, Credit
          Suisse, and Bear Stearns allocated to those investors material
          portions of the restricted number of Marimba shares issued in
          connection with the Marimba IPO; and

     (ii) Morgan Stanley, Credit Suisse and Bear Stearns had entered
          into agreements with customers whereby Morgan Stanley, Credit
          Suisse and Bear Stearns agreed to allocated Marimba shares to
          those customers in the Marimba IPO in exchange for which the
          customers agreed to purchase additional Marimba shares in the
          aftermarket at pre-determined prices.  As alleged in the
          complaint, the SEC is investigating underwriting practices in
          connection with several other initial public offerings.

Contact Sue Null, Charlie Gastineau or Jackie Addison at CAULEY GELLER
BOWMAN & COATES, LLP at 1-888-551-9944 or info@classlawyer.com for more
information.


MERCK-MEDCO: Charged with Prescription Pricing Fraud & Racketeering
-------------------------------------------------------------------
On Wednesday, Ruth Ann Smith, a paralegal taking tamoxifen, a breast
cancer drug, and four law firms representing her, filed a complaint in
U.S. District Court in Fort Lauderdale alleging Merck-Medco's has
defrauded prescription drug beneficiaries across the country and that
the company's actions represent a pattern of racketeering.  The
complaint asks the court to classify the case as a class action
covering everyone who's been overcharged for the drug.

I just wanted to know why I'm suddenly paying $12 more a month than I
paid the month before, Smith told reporters.  My doctor said I'll be on
it for at least five years, maybe 10, and there are lots of people on
this drug.

Jeff Simek, vice president for public affairs at Merck-Medco, said he
had not seen the complaint and had not heard from Smith or her lawyers,
but the allegations conflict with company policies.

They're just misclassifying it in order to make money for themselves,
and the people taking the drug are paying more than they should, said
Eric Lee, an attorney with Atlas Pearlman, another Fort Lauderdale firm
representing Smith.


NETZERO, INC.: Milberg Weiss Files Shareholder Complaint in New York
--------------------------------------------------------------------
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that
a class action lawsuit was filed on April 26, 2001 on behalf of
purchasers of the securities of NetZero, Inc. (NetZero or the Company)
(NASDAQ:NZRO) between September 24, 1999 and September 28, 2000,
inclusive. A copy of the complaint filed in this action is available
from the Court, or can be viewed on Milberg Weiss' website at:
http://www.milberg.com/netzero/

The action, numbered 01-CV-3534, is pending in the United States
District Court for the Southern District of New York, located at 500
Pearl Street, New York, NY 10007, against defendants NetZero, Mark R.
Goldston, Charles S. Hilliard, Ronald T. Burr, Goldman Sachs Group,
Inc. (Goldman Sachs), BancBoston Robertson Stephens, Inc. (BancBoston)
and Salomon Smith Barney, Inc. (Salomon)

The complaint alleges violations of Sections 11, 12(a)(2) and 15 of the
Securities Act of 1933 and Section 10(b) of the Securities Exchange Act
of 1934 and Rule 10b-5 promulgated thereunder. On September 24, 1999,
NetZero commenced an initial public offering of 10 million of its
shares of common stock at an offering price of $16 per share (the
NetZero IPO). In connection therewith, NetZero filed a registration
statement, which incorporated a prospectus (the Prospectus), with the
SEC. The complaint further alleges that the Prospectus was materially
false and misleading because it failed to disclose, among other things,
that: (i) Goldman Sachs, BancBoston and Salomon had solicited and
received excessive and undisclosed commissions from certain investors
in exchange for which Goldman Sachs, BancBoston adn Salomon allocated
to those investors material portions of the restricted number of
NetZero shares issued in connection with the NetZero IPO; and (ii)
Goldman Sachs, BancBoston and Salomon had entered into agreements with
customers whereby Goldman Sachs, BancBoston and Salomon agreed to
allocate NetZero shares to those customers in the NetZero IPO in
exchange for which the customers agreed to purchase additional NetZero
shares in the aftermarket at pre-determined prices. As alleged in the
complaint, the SEC is investigating underwriting practices in
connection with several other initial public offerings.

For additional information, contact Steven G. Schulman or Samuel H.
Rudman at Milberg Weiss at (800) 320-5081 or netzerocase@milbergNY.com


NORTHWEST AIRLINES: Paying 3,700 Trapped Passengers $1,300 Each
---------------------------------------------------------------
Under a settlement pact, Northwest Airlines will pay a total of
$7,150,000 to some 3,700 passengers -- about $1,300 each -- who are
participants in a class-action lawsuit against the carrier pending
before the Wayne County Circuit Court in Michigan.  The judge approved
the settlement this week.

As widely reported, the passengers filed suit after they were trapped
on some 30 aircraft at Detroit Metropolitan Airport during a snowstorm
that occurred in early January, 1999.  Passengers were trapped onboard
because the aircraft could not take off or return to gates suffered
inconveniences such as overflowing toilets and running out of food and
water according to The Associated Press.

The compensation will be awarded depending on the length of
inconvenience suffered with about 1,400 passengers delayed 2-5 hours
receiving about $1,000; 1,300 people delayed 5-8 hours receiving
$1,400 and some 600 passengers delayed for more than eight hours
receiving about $2,000.

Northwest Airlines has stated that it is glad the issue is resolved so
that it can now focus on 'service and operational excellence.'


NORTHWEST AIRLINES: EEOC Sues for Discrimination of Seizure Suffers
-------------------------------------------------------------------
The U.S. Equal Employment Opportunity Commission filed a lawsuit
against Northwest Airlines on Wednesday accusing the carrier of
refusing to hire people with seizure disorders as airplane cleaners and
baggage handlers.  The class action lawsuit, filed on behalf of three
individuals and others nationwide who were denied employment, seeks
compensatory and punitive damages of up to $300,000 per claimant.  The
EEOC also asks that the court order an end to any discriminatory
employment practices by Northwest.

Northwest spokeswoman Kathy Peach speaking to the Associated Press that
she couldn't comment specifically on the lawsuit because airline
officials had not yet received a copy. ``Our policies and procedures
are consistent with Northwest's obligation to provide the flying public
with the highest possible safety standards while meeting the Americans
with Disabilities Act requirements,'' Peach told the AP.


PENN TREATY: Cauley Geller Files Securities Fraud Suite in Pennsylvania
-----------------------------------------------------------------------
The Law Firm of Cauley Geller Bowman & Coates, LLP filed a class action
lawsuit in the United States District Court for the Eastern District of
Pennsylvania on behalf of purchasers of Penn Treaty American
Corporation (NYSE: PTA) common stock during the period between November
7, 2000 and March 29, 2001, inclusive.

The complaint charges Penn Treaty and certain officers and directors
with violating the federal securities laws by issuing a series of
materially false and misleading statements about the Company's
financial health.  Penn Treaty underwrites and sells insurance products
through its subsidiaries.  The complaint alleges that during the Class
Period, defendants reported that Penn Treaty was experiencing a
tremendous growth in sales, and repeatedly said that the growth was not
jeopardizing the Company's health, and that it had adequate reserves
for the increased level of business.  The complaint charges that in
fact, the company continued selling policies during its fourth quarter
of 2000 despite an inability to maintain adequate reserve levels, and
despite the fact that the Company's growth put its solvency at risk.

In effect, Penn Treaty sold itself out of existence.  Premiums grew by
22% during the fourth quarter of 2000.  But instead of the $40 million
in reserves required by regulators, the Company had just $17.2 million
in capital by the end of the year.  On March 30, 2001, Penn Treaty
issued a new release stating that, among other things, its reserves had
sunk so far below the statutory minimum that it faced possible
liquidation and that its independent accountants were questioning the
company's ability to remain a viable entity.  After the announcement,
Penn Treaty stock fell from a closing price of $17.46 on March 29, 2001
to $10.17 the next day -- a 42% decline.  Further revelations about the
Company's inadequate reserves and financial problems drove down the
stock price to nearly $3 a share by April 2, 2001.

Contact Sue Null, Charlie Gastineau or Jackie Addison at CAULEY GELLER
BOWMAN & COATES, LLP at 1-888-551-9944 or info@classlawyer.com for
further details.


PHOTOWORKS, INC.: Reaches Accord on Film Marketing Complaints
-------------------------------------------------------------
PhotoWorks (Nasdaq:FOTO), the leading Internet photo services company,
has reached an out-of-court settlement regarding a nationwide
class action lawsuit, Drinkard, et al. v. PhotoWorks, Inc. related to
the company's processing and film offers. Without admitting wrongdoing
or liability, PhotoWorks agreed with class representatives to settle
the lawsuit for agreements regarding future business conduct,
distribution of film and discount coupons to the public, and disclosure
of film processing information.

Without admitting wrongdoing or liability, PhotoWorks agreed with class
representatives to settle the lawsuit for agreements regarding future
business conduct, distribution of film and discount coupons to the
public and disclosure of film processing information. The Company also
agreed to amounts payable to the class representatives and class
counsel of approximately $335,000.  Pursuant to the agreement and Court
order, a summary of the terms of settlement will be published in the
USA Today and on a website referred to in that publication, and in an
issue of Photo Trade News. The settlement is subject to Court approval.

PhotoWorks is the leading Internet photo services company dedicated to
providing its customers with innovative ways to enjoy and use their
photos. The PhotoWorks service provides both traditional and digital
camera owners with the easiest way to archive and organize photos
online, share them with friends and family, and order reprints, photo
albums and other gifts.  Based in Seattle, PhotoWorks, Inc.
(Nasdaq:FOTO) was founded in 1978. The Company generated over $76
million in net revenues for the 12 months ended Dec. 30, 2000.  More
information is available at www.photoworks.com or by calling 800/746-
8696.


TOBACCO LITIGATION: Attorney General Ashcroft Hasn't Decided Anything
---------------------------------------------------------------------
Attorney General John Ashcroft said yesterday he's made no decision on
the future of the government's massive lawsuit against the tobacco
industry as two Democratic senators pressed him to fully fund it and
make it a priority, according to Reuters.

Testifying in Congress, Ashcroft also said he had not decided to
reassign attorneys at the Department of Justice who have been working
on the case.

"I've not made any indication on reassigning attorneys," he told a
Senate appropriations subcommittee hearing on his department's fiscal
2002 budget.  "I have not made any decisions about the case."

The business-friendly Bush administration is widely expected not to
pursue the case with the same vigor as the previous Clinton
administration, amid increased speculation the lawsuit will be dropped.

The lawsuit was brought in 1999 with the strong support of then-
President Bill Clinton. But some Republicans in Congress have sought to
cut off funding for the lawsuit, President Bush questioned it as a
candidate and Ashcroft also opposed the litigation when he was in the
Senate.

Democratic Senators Patrick Leahy and Richard Durbin said in a letter
to Ashcroft: ``It is time for the administration to make a clear
decision as to whether it will seek to hold the tobacco industry
accountable for its years of deception and damage to the health of
thousands of Americans.''


                  LENGTHY REVIEW TO KILL THE CASE

``A lengthy review will kill the lawsuit as surely as a decision to
terminate it. Inaction will be the death knell of the government's
case,'' they said.

``The lawsuit needs to be funded and legal work needs to proceed now,''
the lawmakers said, urging Ashcroft to formally decide to fully fund
the case and make it a priority in the Justice Department's work.

Department lawyers handling the lawsuit have warned that insufficient
funding may force them to drop the case.

Department officials said the lawyers, in a memo sent last month to
Ashcroft, expressed concern about how the case could proceed without
adequate funds. The Bush administration's proposed budget does not
provide enough money, they said.

At the hearing, Ashcroft denied there had been any change in policy
regarding the lawsuit.

The Bush administration has asked Congress for $1.8 million to pay
salaries and staff costs for the tobacco litigation team. But the team
reportedly estimated it would need more than $57 million this year to
keep working on the case.

Ashcroft said the $1.8 million request was identical to the budget
request submitted by his predecessor, Janet Reno.

If needs arise for more money, he said it was anticipated that
"additional funding would be available for the case in the way that has
has been in the past" -- by redirecting funds from other government
agencies.

Under the racketeering claims brought by the Justice Department, the
lawsuit seeks to force the tobacco firms to give up billions of dollars
in "ill-gotten" profits obtained through fraud and deceit since the
1950s.

The Justice Department earlier this year amended the lawsuit in an
effort to resurrect claims previously dismissed by the judge that seek
to recover billions of dollars spent by the federal government on
smoking-related illnesses.

Ashcroft said that was one of the issues pending. He said any change in
the Justice Department's position "would be a decision best informed by
what the court does."

The defendants are Philip Morris, R.J. Reynolds , British American
Tobacco Plc's Brown & Williamson Tobacco Corp., Loews Corp.'s Lorillard
Tobacco Co. Inc., Vector Group Ltd.'s Liggett Group Inc., the Council
for Tobacco Research U.S.A. Inc. and the Tobacco Institute Inc.


VENTRO: Sirota and Lovell Firms File Shareholder Complaint in S.D.N.Y.
----------------------------------------------------------------------
The law firms of Sirota & Sirota, LLP ((212) 425-9055 or
www.sirotalaw.com) and Lovell & Stewart, LLP ((212) 608-1900 or
www.lovellstewart.com) filed a class action lawsuit on April 24, 2001
on behalf of all persons and entities who purchased, converted,
exchanged or otherwise acquired the common stock of Ventro Corporation
(NasdaqNM:VNTR), between July 26, 1999 and March 26, 2001 inclusive.

The lawsuit asserts claims under Sections 11, 12 and 15 of the
Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC thereunder
and seeks to recover damages. Any member of the class may move the
Court to be named lead plaintiff. If you wish to serve as lead
plaintiff, you must move the Court no later than June 25, 2001.

The action, Abraham Kassin v. Ventro Corp., et al., is pending in the
U.S. District Court for the Southern District of New York (500 Pearl
Street, New York, New York), Docket No. 01-CV-3450 (BSJ) and has been
assigned to the Hon. Barbara S. Jones, U.S. District Judge. The
complaint alleges that Ventro Corporation, David S. Perry, its
President and CEO, Brook H. Byers, its Chairman, and Ventro directors
Jonathan O. Callaghan, Jerrold B. Harris, S. Joshua Lewis, John A.
Pritzker and L. John Wilkerson violated the federal securities laws by
issuing and selling Ventro Corp. common stock pursuant to the July 26,
1999 IPO without disclosing to investors that at least two of the lead
underwriters in the offering had solicited and received excessive and
undisclosed commissions from certain investors.

In exchange for the excessive commissions, the complaint alleges, lead
underwriters Morgan Stanley Dean Witter & Co. and BancBoston Robertson
Stephens, Inc. allocated Ventro Corp. shares to customers at the IPO
price of $15.00 per share. To receive the allocations (i.e., the
ability to purchase shares) at $15.00, the defendant underwriters'
brokerage customers had to agree to purchase additional shares in the
aftermarket at progressively higher prices. The requirement that
customers make additional purchases at progressively higher prices as
the price of Ventro Corp. stock rocketed upward (a practice known on
Wall Street as laddering) was intended to (and did) drive Ventro's
share price up to artificially high levels. This artificial price
inflation, the complaint alleges, enabled both the underwriters and
their customers to reap enormous profits by buying stock at the $15.00
IPO price and then selling it later for a profit at inflated
aftermarket prices, which rose as high as $34.88 during its first day
of trading.

Rather than allowing their customers to keep their profits from the
IPO, the complaint alleges, the defendant underwriters required their
customers to kick back some of their profits in the form of secret
commissions. These secret commission payments were sometimes calculated
after the fact based on how much profit each investor had made from his
or her IPO stock allocation.

The complaint further alleges that defendants violated the Securities
Act of 1933 because the Prospectus distributed to investors and the
Registration Statement filed with the SEC in order to gain regulatory
approval for the Ventro Corp. offering contained material misstatements
regarding the commissions that the underwriters would derive from the
IPO transaction and failed to disclose the additional commissions and
laddering scheme discussed above.

     Contact: Lovell & Stewart, LLP
              Christopher Lovell
              Victor E. Stewart
              Christopher J. Gray
              212/608-1900
              sklovell@aol.com

              or

              Sirota & Sirota, LLP
              Howard B. Sirota
              Saul Roffe
              212/425-9055
              info@sirotalaw.com


                              *********

S U B S C R I P T I O N  I N F O R M A T I O N

Class Action Reporter is a daily newsletter, co-published by Bankruptcy
Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc.,
Washington, DC.  Theresa Cheuk, Managing Editor.

Copyright 2001.  All rights reserved.  ISSN 1525-2272.

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