It looks obvious

The news about the potential lawsuit against Vonage isn’t a surprise. Obviously there are many upset investor that lost a lot of money in the Vonage IPO fiasco . However they have no one to blame but themselves.

I’m a Vonage customer for quite awhile now and a such I was one of many that got the offer to purchase Vonage shares at the IPO. I decided to pass on the offer and not to purchase these share because of several reasons.

I did not believe in the company. I read enough to know that Vonage’s cost of acquiring new customer exceeds the revenue from the customer charges; I also read enough about the high churn rate. But mostly I thought that Vonage lost its opportunity by sticking to only phone service and once the Cable and the Telecom big player start to push their combine services Vonage is doomed.

I also don’t own stocks in direct investment. My 401K fund trades stocks, but not me directly. The market is to complex and I don’t have the time and passion to risk my savings. Long time ago I realized that trading stocks directly might be very profitable, but it is mostly very risky – a risk I was not equipped to analyze and mitigate.

Many Vonage customers couldn’t pass on the offer to buy stocks in the IPO, they only saw the opportunity and ignored the risk. They chose not to read the basic reports on the company they didn’t read the any analysis . Not everyone made this mistake, and some of them wrote about it .

It is not a good feeling to lose 30% of investment, but this investors need to learn to take responsibility for their decisions.

Link: Vonage Faces Lawsuit Over IPO

The suit, filed in U.S. District Court in New Jersey, claims Vonage tried to compensate for a lack of interest among sophisticated institutional investors who usually dominate IPO’s by selling shares to consumers, according to the statement. The suit contends that Vonage and its underwriters violated a securities law that "requires that a company recommending the purchase or sale of its securities to a customer must have a reasonable basis for believing that the recommendation is suitable for the customer," the statement said. Vonage, "had no such reasonable basis in this case and improperly crammed investors into the Vonage IPO regardless of their suitability," according to the statement.