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Vonage may be forced to let investors drop its IPO

NEW YORK -- Vonage Holdings Corp. customers who want to back out of last week's initial public offering by the Internet phone company may have a legal basis for doing so.

The Holmdel, N.J., company issued a statement yesterday demanding that customers who signed up for the IPO complete their purchases at the initial price of $17 a share. The statement follows a 32 percent decline in Vonage shares since the May 23 offering, the worst stock debut this year. The stock hit a new low of $11.52 yesterday.

Vonage has said little about notices that the company sent out prior to the IPO that may have violated federal securities laws.

These technical errors, outlined on page 140 of the offering documents one day before the IPO, may give customers the right to force Vonage to buy back their shares, according to Vonage's own documents.

A Vonage spokesman declined to comment. The company flagged the problem in a May 22 filing which also said that it would have ``meritorious defenses" to any claims of defects in the IPO process.

On May 23, Vonage strengthened its warning that it may have made technical errors, which may give customers the right ``to require us to repurchase their shares at the IPO price."

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