Internet indeed has a long memory. Some respectable bloggers are praising one of the undertakings of founder and CEO of Reply.com, Autoweb, as an example of incredible success.

Flash back… Year 2001. A lawsuit is filed on behalf of shareholders of Autoweb in connection to IPO (Initial Public Offering):

The complaint alleges that defendants Autoweb.com, Inc., Dean A. DeBiase, Farhang Zamani, Payam Zamani, Mark N. Diker, Jay C. Hoag, Mark R. Ross and Peter S. Sealey violated the federal securities laws by issuing and selling Autoweb.com common stock pursuant to the IPO without disclosing to investors that some of the underwriters in the offering, including the lead underwriters, had solicited and received excessive and undisclosed commissions from certain investors. – Source: AllBusiness.com

The above mentioned lawsuit also alleges that underwriters and their costumers were able to reap enormous profit by buying the stock at IPO of $14 and then selling it at inflated aftermarket prices. A profit with a twist if you wish:

Rather than allowing their customers to keep their profits from the IPO, the complaint alleges, the 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. – Scourse: AllBusiness.com

So how did the law suit ended? Apparently the case is still in the courts: Autoweb.com, Inc. – Securities Class Action Suit.

What happened to Autoweb? It was acquired by Autobytel, Inc after Autoweb’s stock price had gone below $1.

Was Autoweb an unfortunate victim of the frenzy by the “class action suits” lawyers? Hard to tell.

The bottom line is that investors in Autoweb where likely to loose their money and have never recovered their loss.