Virgin Mobile USA Inc. has been slapped with a federal securities class action lawsuit that accuses the company of presenting false information relating to business operations and financials.

The Howard G. Smith law firm, which filed the class action, claims Virgin Mobile USA's actions illegitimately increased the share price of the mobile virtual network operator. The law firm represents investors who bought Virgin Mobile USA common stock between Oct. 11 and Nov. 15, 2007.

"[When Virgin Mobile] conducted its IPO, [it] filed a registration statement with the SEC," the filed complaint says. "The IPO was a financial success for the company, as it raised $412.5 million by selling 27.5 million shares of stock to the public at a price of $15 per share.

"[Later] the company shocked investors when it announced its quarterly financial and operational results for the third-quarter of 2007," the complaint says. "The company reported a net loss of $7.3 million, compared to a net loss of $5.1 million for the third-quarter of 2006."

The news generated unusually heavy trading volume and caused Virgin Mobile USA's stock to plummet $1.54 per share, or 10 percent, to close at $9.19 a share on Nov. 16.

Virgin Mobile offers prepaid wireless communications services that target mobile users ages 14-34.

The federal class action was filed in the United States district court of the Southern district of New York.

"[The claim alleges that] in connection with the company's IPO, the defendants failed to disclose â?¦ that the company's expenses had significantly increased for the third quarter of 2007, the subscriber growth trends had dramatically slowed, the company lacked adequate internal and financial controls and, as a result of the foregoing, the registration statement was false and misleading at all relevant times."

Howard G. Smith is hoping to receive restitution for class members who bought stock pursuant or traceable to the Virgin Mobile USA's initial public offering on or about Oct. 11 through Nov. 15, 2007.

Virgin Mobile has refused to comment beyond a statement sent to this publication.

"We believe that lawsuit has no merit and are defending it vigorously," said Jayne Wallace, spokeswoman at Virgin Mobile.

Click here for the PDF of the securities class action lawsuit against Virgin Mobile USA.