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Auctionbytes-Update, Number 64 - February 17, 2002 - ISSN 1528-6703     Previous Story | Contents | Next Story

PayPal Goes Public, Stock Trades on NASDAQ By Ina & David Steiner AuctionBytes.com February 17, 2002 Reading AuctionBytes: PayPal Goes Public, Stock Trades on NASDAQ

Online auction payment firm PayPal, popular with online auction users, made its initial public offering of stock and began trading on the NASDAQ stock exchange on Friday. The filing was initially scheduled for the previous week, but PayPal ran into numerous problems at the last minute: A competitor named CertCo sued PayPal for patent infringement on February 4, 2002 PayPal disclosed that Tumbleweed Communications Corporation could sue it for patent infringement LPPI (Lew Payne Publishing, Inc.) filed a lawsuit against PayPal last year and served the company with the suit on February 7, 2002 PayPal disclosed that the states of Louisiana and New York had written to PayPal expressing the views that PayPal's service constituted an unauthorized banking business in their states PayPal's Director of Communications had contacts with the author of a research note two days prior to the initial scheduled date of IPO pricing, in possible violation of the Securities Act of 1933. Salomon Smith Barney, primary underwriter for PayPal's IPO, scrambled to get a new prospectus disclosing the CertCo lawsuit printed and delivered to prospective investors before the rescheduled IPO pricing on February 14. Despite the numerous last minute disclosures, PayPal went forward with its IPO and investors responded positively. PayPal priced its initial public offering of 5.4 million shares of its common stock at $13 per share on Thursday, and the stock closed at $20.09 at the end of trading day Friday. The biggest impact for online auction users may be the states' investigations into whether PayPal should be regulated by their state banking laws. Media reports indicate that Louisiana has already forced PayPal to stop practicing business in its state or face fines of $1,000/day. AuctionBytes has been contacting Attorneys General in various states to gather more information, and we will continue to report new developments in the daily AuctionBytes Newsflash newsletter. Note: You can subscribe to AuctionBytes Newsflash by sending an email to newsflash-request@auctionbytes.com - make sure that “subscribe” is in the subject line.