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Angie's List hit with shareholder suit

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Angie’s List’s CEO William Oesterle and four other top executives made a series of false or misleading statements about the company’s prospects that inflated its stock price earlier this year as they sold $13 million of their own shares, a lawsuit seeking class-action status alleges.

Bringing the case on behalf of shareholders Eva and Harold Baron is Robbins Geller Rudman & Dowd LLP, a national securities litigation firm that led $7.3 billion in settlements for former investors of scandal-plagued energy giant Enron Corp.

Robbins Geller said it filed the suit on Monday in U.S. District Court for the Southern District of Indiana.  

The suit alleges multiple violations of federal securities regulations and seeks unspecified financial damages on behalf of common shareholders between Feb. 14 and Oct. 23 of this year.

The 27-page complaint said Oesterle was the biggest benefactor, selling 486,400 shares for a net $10.4 million.  

It wasn’t immediately clear if the stock sales were required per terms of the executives' stock option plans, however.

Also listed as defendants are co-founder and chief marketing officer Angela Hicks Bowman; controller Charles Hundt; former chief financial officer Robert R. Millard; and former chief technology officer Manu Thapar.

Broadly, the suit recounts a litany of positive statements made by Oesterle and other executives during earnings calls and in presentations to analysts and shareholders.  

In fact, the Indianapolis-based firm that provides reviews of service providers (such as plumbers and roofers) by its members exceeded analysts' expectations during much of 2013.

“Based on the positive mantra” of executives, the suit alleges, Angie’s stock price hit a high of $28 last July. At the same time, executives were selling shares, “with the price of the company’s stock artificially inflated based on their misstatements.”

A key issue in the complaint is that the company was increasingly relying on providing free memberships in order to “artificially” boost its subscriber figure.

The suit cites an interview that The Wall Street Journal conducted with Oesterle that indicated  Angie’s was cutting the subscription cost for new members in New York, Chicago, San Francisco, Washington, D.C., and Indianapolis to $10 from $40.

The market didn’t respond well to the news, with Angie’s shares falling more than 17 percent on Oct. 3.   

The stock would fall from $28 earlier in the summer to a low of around $12 this fall. In trading Tuesday morning, shares had dropped 2.5 percent to $14.27.

The company went on to report a third quarter loss of $13.5 million, or 23 cents a share, which was worse than the 20-cents-per-share loss that analysts were led to expect “based on defendants’ bullish” statements, the suit alleges.

Angie’s List spokeswoman Cheryl Reed said Tuesday that the company would have no comment about the lawsuit.

Robbins Geller’s local counsel is Parr Richey Obremskey Frandsen & Patterson LLP.
 

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  1. Indianapolis employers harassment among minorities AFRICAN Americans needs to be discussed the metro Indianapolis area is horrible when it comes to harassing African American employees especially in the local healthcare facilities. Racially profiling in the workplace is an major issue. Please make it better because I'm many civil rights leaders would come here and justify that Indiana is a state the WORKS only applies to Caucasian Americans especially in Hamilton county. Indiana targets African Americans in the workplace so when governor pence is trying to convince people to vote for him this would be awesome publicity for the Presidency Elections.

  2. Wishing Mary Willis only God's best, and superhuman strength, as she attempts to right a ship that too often strays far off course. May she never suffer this personal affect, as some do who attempt to change a broken system: https://www.youtube.com/watch?v=QojajMsd2nE

  3. Indiana's seatbelt law is not punishable as a crime. It is an infraction. Apparently some of our Circuit judges have deemed settled law inapplicable if it fails to fit their litmus test of political correctness. Extrapolating to redefine terms of behavior in a violation of immigration law to the entire body of criminal law leaves a smorgasbord of opportunity for judicial mischief.

  4. I wonder if $10 diversions for failure to wear seat belts are considered moral turpitude in federal immigration law like they are under Indiana law? Anyone know?

  5. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

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