Alien's Creepy IPO Ride

A representative from Rambus declined to comment further on the investigation.

In a happier time, Eulau's role at Rambus normally would have gone unnoticed. The risk section would have been treated by most as mere boilerplate.

In fact, that's what investors did a year ago, when all of Wall Street ignored the news that a top executive at Refco(RFXCQ.PK Quote) had run into some serious trouble with securities regulators. Investors also overlooked warnings in the brokerage's prospectus that the firm's financial controls weren't up to snuff. Instead, Refco's IPO last August was quite a hit, rising nearly 20% in its first day of trading.

Yet, two months later, the commodities brokerage went bust after being sunk by an unrelated accounting scandal that led to the filing of criminal charges against its former CEO. After the debacle, some investors said they wished they had paid closer attention to the warning signs indicating that something might have been amiss with Refco's management.

This August, however, the IPO market is thorny, and Wall Street is suddenly souring on new stock offerings. The Alien Tech IPO, which was being run by Bear Stearns, now joins a list of other failed deals. Recently, a number of IPOs have been delayed or canceled, including offerings for brokerage firm Ryan Beck and restaurant chain Gordon Biersch Brewery.

On Tuesday, TheStreet.com learned that an IPO of Qimonda, being run by Credit Suisse, Citigroup and JPMorgan Chase, was also running into some trouble.

"There is always the basic idea of a small amount of information having a big effect," says Matthew Rhodes-Kropf, professor of finance at Columbia University. "Sometimes there is only a tiny amount of information, but it actually provides a normal amount of scale."