Chicago: Shefsky & Froehlich in IPO scuffle
Chicago Business reports that Vitacost.com alleges that the firm cost the company million of dollars after failing to uncover problems with the company’s organisation and capital structure. The failings left Vitacost without validly elected directors and officers or duly authorised shares of stock for its 2009 IPO, according to a filing in a Florida federal court.
In the suit, Vitacost claims that the firm's failure to warn management of the problems cost the company $8 million in regulatory and shareholder actions and plaintiff's attorney fees
Vitacost also claims that the deficiencies triggered the longest trading halt in Nasdaq history which saw the company’s value decline by more than $50m.
The law suit claimed that if Shefsky ‘exercised reasonable care in the performance of its legal services for the company’ it would have been able to identify potential problems and advise the company to ‘take the appropriate steps to correct those defects prior to the IPO’.
Shefsky, which represented Vitacost from 2002 to 2010 according to the lawsuit, declined to comment.