Securities Suit Says Online Ad Co. Lied About Bot-Blocking

By Daniel Siegal (September 5, 2014, 5:23 PM EDT) -- Online advertising platform Rocket Fuel Inc. was hit with a putative shareholder class action on Wednesday alleging the company pumped up its stock price by lying about its ability to block value-draining "robot traffic," with insiders cashing out before the truth was revealed.

The suit alleges that Rocket Fuel's misrepresentations pumped up its stock price before August reports revealed it was no better at blocking so-called bot traffic than its competitors, causing its shares to drop from $24 to $17 in a day — after insiders and early investors had cashed out in a $175 million secondary offering.

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