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SEC Probes Amid Charges of Securities Violations

August 22, 2000|From Bloomberg News Inc. said Monday the Securities and Exchange Commission is investigating whether the company, co-founded by former U.S. Surgeon General C. Everett Koop, violated federal securities laws.

The SEC asked the health information Web site to voluntarily provide information regarding allegations made in several lawsuits against the company, said in its quarterly report.

Company officials were unavailable for comment. In the quarterly report, the Austin, Texas-based company announced that it had received a letter from the SEC seeking information.

"This letter states that the SEC's request for information should not be construed as an indication by the SEC that any violation of the federal securities laws has occurred," the company said.

The SEC, as a matter of course, does not comment on investigations.

At least four law firms have said they are filing class-action lawsuits against The company said it "believes that the claims asserted in the lawsuits . . . are without merit and intends to defend these litigations vigorously."

One suit, filed by Berman, DeValerio & Pease, charged that the company failed to disclose until March 30 that its auditors had determined on Feb. 15 that they had doubts about the ability of the Web site to stay in business.

Milberg Weiss Bershad Hynes & Lerach, charged that the company made "materially false and misleading statements" in its filing for an initial public offering in June 1999. sold shares for $9 apiece and netted $88.5 million. The stock traded as high as $45.75 in July 1999. Monday, it closed at $1.34, up 9 cents on Nasdaq.

Meanwhile, the company said it lost $1.18 a share in the second quarter, versus $1.28 a share in the 1999 quarter, Reuters reported.

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