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October 5, 2006 5:23 PM
Posted by Kim Peterson
Shareholders filed a class action lawsuit against Seattle-based Loudeye and its executives in federal court Wednesday, claiming that the digital media company misrepresented the state of its business. You can view the lawsuit here.
Between May 2003 and November 2005, the suit claims, Loudeye reassured investors about its business when in fact it was "suffering from a host of undisclosed adverse factors." It was only after this period that investors learned of the real troubles at Loudeye, the suit claims. Loudeye's share price tumbled during the period the suit refers to.
The suit seeks unspecified damages. Loudeye, which is in the process of being sold to cellphone giant Nokia for $60 million in cash, has not responded to the filing yet in court.
Update: Loudeye submitted a regulatory filing today that said it intends to "vigorously defend against the claims and allegations in the complaint," and that doing so may require significant attention and resources of management.