Specifically, CPR is investigating whether the Company and its officers and/or directors failed to disclose the following information that: (i) Angie's List was increasingly relying on providing free memberships in order to artificially boost its subscriber figures; (ii) contrary to the Company's claim that it provides its members with unbiased, online reviews, disallowing service providers from buying ratings, the Company consistently derived more than half its revenues from the service providers; (iii) that because Angie's List charged service providers hundreds of dollars for "hot leads", service providers were faced with the choice of charging above market prices for basic, run-of-the-mill services (that could be procured by consumers for cheaper prices) in order to absorb the high referral fees Angie's list was charging -- or simply abandoning Angie's list; (iv) that the legitimacy of the service provider side of Angie's List business model was dubious, as service providers were forced to pay the Company thousands of dollars a year in order to be listed as a highly rated service providers, and if they did not, they would not get customer referrals from Angie's List; and (v) that Angie's List did not vet the service providers listed and recommended on its website, either for qualifications or for safety, leading many consumers to question the value of its recommendations, causing them to be unwilling to pay outsized membership fees. As a result of these omissions, the Company and its officers and directors lacked a reasonable basis for their positive statements about the Company and its business, earnings and financial prospects.Angie's List was co-founded by its namesake, Angie Hicks Bowman, the company's chief marketing officer, and its CEO, William Oesterle. Oesterle has close political ties to former Gov. Mitch Daniels and now Purdue University President, having served as his one-time campaign manager during Daniels' first run for governor in 2004. Oesterle and other key officers are accused of selling off more than $13 million worth of shares in the company during the period of time they allegedly made material misrepresentations about the company's performance. Prominent Indianapolis businessman Michael "Mickey" Maurer, the owner of the company that publishes the Indianapolis Business Journal and Indiana Lawyer, serves on the company's board of directors. Maurer formerly served as head of the Indiana Economic Development Corporation during the Daniels' administration. Angie's List has received more than tens millions dollars' worth of state and local economic development incentives for its base of operations in downtown Indianapolis.
The price of the company's shares closed today at $13.57, down $1.58 a share, or 10.43% on a day when more than 2.5 million of the company's shares were traded, much higher than its average trading day volume of about 1.8 million shares. The stock traded as low as $13.29 per share today after opening today's trading at $15.00 on a previous closing day price of $15.15.