Virgin hit with lawsuit

So it appears that Leap Wireless isn’t the only wireless carrier entangled in a lawsuit. The same firm that is forming the class against Leap is working against Virgin Mobile, citing shady dealings by the company leading up to its October IPO. Specifically, the suit “alleges that the MVNO may have withheld actual losses the company suffered in the third quarter.” This is clearly bad news for Virgin; they had planned to use the money from their IPO to pay off some debt and buy out some of Sprint Nextel’s ownership in the company. Now it might be going to repay deceived investors.

The law firm notes that Virgin Mobile USA’s shares fell 14.4% after the company announced its third quarter loss widened to $7.3 million earlier this month.

A spokeswoman for Virgin Mobile USA said the investigation is “completely without merit and Virgin Mobile is defending it vigorously.”

Well, of course they’re defending their position. We haven’t yet seen how Virgin deceived investors, nor what the actual losses were, if in fact they were different than what was reported. Until that information comes to the forefront, expect Virgin to hold their ground.

Virgin’s shares have decreased just a hair under 50 percent since their October IPO: $15 to $7.52. This is not encouraging from a company that has yet to report earnings in the black.

[RCR Wireless News] [Reuters]

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