Red Hat sued over IPO

By David Becker
Staff Writer, CNET News

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A class-action lawsuit filed Tuesday accuses Linux software leader Red Hat of misleading investors in relation to its initial public offering.

The suit, filed in U.S. District Court in New York, accuses Red Hat of filing a misleading prospectus in connection with its April 1999 IPO by not fully disclosing how underwriters Credit Suisse First Boston and Goldman Sachs planned to sell their shares. The suit, filed by New York-based firm Milberg Weiss Bershad Hynes & Lerach, names the underwriters, Red Hat and Red Hat executives Robert Young, Matthew Szulik and Marc Ewing and seeks unspecified damages.

"With respect to Red Hat and its officers and directors, we think that the claim has no merit and we have no further comment at this time," Red Hat spokeswoman Melissa London said Wednesday.

A similar suit was filed against Red Hat on Wednesday by Pennsylvania law firm Schiffrin & Barroway.

Hardware seller VA Linux and Credit Suisse are defendants in another lawsuit that makes similar accusations regarding VA's December 1999 IPO. CNET News.com's Stephen Shankland contributed to this report.

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