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State Stock Volatile in Trading


Shares of beleaguered Internet retailer seesawed dramatically Tuesday in the first trades since regulators slapped a two-week halt on trading March 24 and launched an investigation into possible stock manipulation.

Though shares still can't be quoted on exchanges or over the counter, trades via telephone or in person showed the volatility of the money-losing Irvine-based company's stock. It opened at $12 a share, soared to $25 and fell to close at $18 a share.

Separately, Waldron & Co., the Irvine investment banking firm that took public in November, filed a lawsuit Tuesday accusing five former employees of defamation and interference with its business.

The lawsuit also hints that Sen. Alphonse D'Amato (R-N.Y.), prompted by a New York brokerage with an interest in stock, may have spurred the Securities and Exchange Commission to issue its two-week trading ban, an uncommon action for the agency.

D'Amato and his aides were unavailable for comment.

The lawsuit, the first of what Waldron and the company say will be several actions they file, signals an aggressive counter-attack after weeks of accusations against the two operations.

"There's been a lot of defaming of my own name and the company name," said Cery Perle, Waldron's president. The suit, filed in Los Angeles County Superior Court, seeks $10 million in damages. Chief Executive Robert J. McNulty declined to comment.

While the retailer's shares can now be traded, they can't be quoted on any exchanges or over the counter until the National Assn. of Securities Dealers approves a brokerage as a market maker, an entity that maintains buy and sell prices and stands ready to buy or sell shares at quoted prices.

So far, only Waldron has an application pending to be a market maker, and it could take five days or more for the NASD to act, according to the regulator. sold 1.3 million shares at $9 each in its initial public offering. The stock peaked at $32.13 last month before retreating in the face of charges that Waldron may have been keeping the price artificially high.

Other brokerages charged that Waldron controlled the stock. John Fiero, president of Fiero Bros. Inc. in New York, complained to the SEC and other authorities and wrote to D'Amato.

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