Stull, Stull & Brody Announces Class Action Against El Sitio, Inc.

A class action lawsuit was filed on June 8, 2001, in the United States District Court for the Southern District of New York, on behalf of purchasers of El Sitio, Inc. (“El Sitio”) LCTO common stock between December 9, 1999 and June 7, 2001, inclusive (the “Class Period”).

The complaint alleges that defendants El Sitio, Inc., Roberto Vivo-Chaneton, Roberto Cibrian-Campoy, Horacio Milberg, Alfredo Jimenez de Arechaga, Carlos Cisneros, Michael Greeley, Guillermo Liberman, Ricardo Verdaguer, Michael Levitt, and Sofia Pescarmona violated the federal securities laws by issuing and selling El Sitio common stock pursuant to the December 9, 1999 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.

The complaint alleges that, in exchange for the excessive commissions, joint lead underwriters Credit Suisse First Boston Corporation and Lehman Brothers Inc., as well as members of the underwriting group Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney, Inc., and Wit Capital Corporation allocated El Sitio shares to customers at the IPO price of $16.00 per share. To receive the allocations (i.e., the ability to purchase shares) at $16.00, the 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 El Sitio stock rocketed upward (a practice known on Wall Street as “laddering”) was intended to (and did) drive El Sitio’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 $16.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $40 during its first day of trading and subsequently reached a peak of $44 7/8 on December 29, 1999.

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.

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 El Sitio 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.

Plaintiff seeks to recover damages on behalf of class members and is represented by, among others, the law firm of Stull, Stull & Brody. Stull, Stull & Brody has litigated many class actions for violations of securities laws in federal courts over the past 25 years and has obtained court approval of substantial settlements on numerous occasions.

If you bought the common stock of El Sitio between December 9, 1999 and June 7, 2001, you may, no later than 60 days from June 8, 2001, request the Court appoint you as lead plaintiff.

If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Tzivia Brody, Esq. at Stull, Stull & Brody by calling toll-free 1-800-337-4983, or by e-mail at SS***@ao*.com, or by fax at 212/490-2022, or by writing to Stull, Stull & Brody, 6 East 45th Street, New York, NY 10017.