Wolf Haldenstein Adler Freeman and Herz LLP Commences Class Action Suit Against Digital River, Inc.

Business/Legal Editors

NEW YORK--(BUSINESS WIRE)--Aug. 27, 2001

The following is an announcement from the law firm of Wolf Haldenstein Adler Freeman & Herz LLP:

Wolf Haldenstein Adler Freeman & Herz LLP has commenced a class action lawsuit in the United States District Court for the Southern District of New York, on behalf of purchasers of Digital River, Inc. ("Digital River" or the "Company") (NASDAQ: DRIV) securities between August 11, 1998 and December 6, 2000, inclusive, against defendants Digital River, certain of its officers and directors, and its underwriters.

The case name and index number are Nicolois v. Digital River, Inc., 01-CV-7992. A copy of the complaint filed in this action is available from the Court, or can be viewed on the Wolf Haldenstein Adler Freeman & Herz LLP website at www.whafh.com.

The complaint alleges that defendants violated the federal securities laws by issuing and selling Digital River common stock pursuant to the August 11, 1998 IPO without disclosing to investors that some of the underwriters in the offering, including the lead underwriters, had solicited and received excessive and undisclosed commissions from certain investors.

Specifically, the complaint alleges that in exchange for the excessive commissions, defendants allocated Digital River shares to customers at the IPO price. To receive the allocations (i.e., the ability to purchase shares) at the IPO price, the underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of Digital River stock rocketed upward (a practice known on Wall Street as "laddering") was intended to (and did) drive Digital River's share price up to artificially high levels. This artificial price inflation enabled both the underwriters and their customers to reap enormous profits by buying stock at the IPO price and then selling it later for a profit at inflated aftermarket prices.

If you purchased Digital River securities during the class period, you may request that the Court appoint you as lead plaintiff by October 8, 2001. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff.

Wolf Haldenstein has extensive experience in the prosecution of securities class actions and derivative litigation in state and federal trial and appellate courts across the country. The firm has approximately 60 attorneys in various practice areas; and offices in Chicago, New Jersey, New York City, San Diego, and West Palm Beach. The reputation and expertise of this firm in shareholder and other class litigation has been repeatedly recognized by the courts, which have appointed it to major positions in complex securities multi-district and consolidated litigation.

If you wish to discuss this action or have any questions, please contact Wolf Haldenstein Adler Freeman & Herz LLP at 270 Madison Avenue, New York, New York 10016, by telephone at [phone] (Fred Taylor Isquith, Esq., Gustavo Bruckner, Esq., Michael Miske, or George Peters), via e-mail at [e-mail] or visit our website at http://www.whafh.com. Your e-mail should refer to Digital River.