Cauley & Geller, LLP Announces Class Action Lawsuit Against CDNow, Inc. Seeking Damages On Behalf of Shareholders.

Business Editors & Legal Writers

BOCA RATON, Fla.--(BUSINESS WIRE)--Sept. 20, 2000

The Law Firm of Cauley & Geller, LLP announced today that it has filed a class action in the United States District Court for the Eastern District of Pennsylvania on behalf of all individuals and institutional investors that purchased the common stock of CDNow, Inc. ("CDNow" or the "Company") (Nasdaq:CDNW) between January 28, 2000 and March 28, 2000, inclusive, and all owners of CDNow common stock on July 26, 2000 and their successors in interest, until the August 22, 2000 close of the tender offer for CDNow by Bertelsmann, Inc. (the "Class Period").

The complaint charges that the Company and certain of its officers and directors violated the federal securities laws by providing materially false and misleading information about the Company's business and, specifically, the merger with Columbia House. As a result of these false and misleading statements the Company's stock traded at artificially inflated prices during the class period. The Complaint alleges that on July 13, 1999, CDNow, Time Warner and Sony Corporation of America announced that they had entered into a merger agreement on the previous day. On March 13, 2000, it was announced that Sony, Time Warner and CDNow had mutually agreed to terminate the merger. Thereafter, CDNow made repeated statements to the news media about the merger termination, including that the merger termination was the result of Columbia House's poor financial condition and that the merger termination was positive for CDNow. The Complaint further alleges that defendants failed to reveal that, on or before January 28, 2000, CDNow's outside auditor advised CDNow management of its "substantial doubt about (CDNow's) ability to continue as a going concern," that this "going concern" qualification would impede the merger with Columbia House and that CDNow could not survive without a merger partner. In its July 26, 2000 Form 14D-9, in connection with the tender offer for CDNow made by Bertelsmann, CDNow also failed to disclose the same material information. The auditor's "going concern" qualification was first disclosed in CDNow's Form 10-K file with the SEC on March 28, 2000. Plaintiffs seek to recover damages on behalf of themselves and all others similarly situated, excluding the defendants and their affiliates.

Cauley & Geller, LLP has substantial experience representing investors in securities fraud class action lawsuits such as this. The firm has offices in Florida, Arkansas and California, but represents shareholders from throughout the nation. If you have any questions about how you may be able to recover for your losses, or if you would like to consider serving as one of the lead plaintiffs in this lawsuit, you must meet certain requirements and take appropriate action by October 23, 2000. You are encouraged to call or e-mail the Firm or visit the Firm's website at www.classlawyer.com.