CDNOW UNDER FIRE AGAIN

CDNow has been hit with yet another class action suit, this one by the law firm of Cauley & Geller LLP, in the U.S. District Court for the Eastern District of Pennsylvania. The Complaint was filed on behalf of shareholders, charging the online retailer with providing materially false and misleading information about the company's business, specifically its failed merger with Columbia House. This follows another class action filed back in August by the N.Y.-based firm of Abbey, Gardy and Squiteri (see hitsdailydouble.com 8/25), who offered plaintiffs 12 lawyers for 99 cents and nothing more to buy ever.

The suit alleges that, as a result of these false statements, the company's stock traded at artificially inflated prices during the class period. CDNow, Time Warner and Sony Corporation of America announced that they entered into a merger agreement in July '99 only to terminate the deal last March. The Complaint further alleges that defendants failed to reveal CDNow's outside auditor had previously advised management of its "substantial doubt about its ability to continue as a going concern," which ended up impeding a merger with Columbia House. It was later revealed CDNow could not continue as a going concern without a merger partner.

The company was acquired by Bertlesmann e-Commerce Group, a deal completed on September 1 (see hitsdailydouble.com 7/20, 8/22, 9/1). Founder jason olim',390,400);">jason olim',390,400);">Jason Olim was recently bumped up to Chairman of the Board and Senior Advisor for Music Strategy and replaced by President/CEO Michael S. Krupit (see hitsdailydouble.com 9/13).