Shares in US toy maker LeapFrog have dropped by 15% only two days after the firm was listed to general acclaim on the New york Stock Exchange.

LeapFrog alarmed investors by revealing it had been hit by litigation on alleged patent infringement. The firm is backed by former 1980s junk bond king Michael Milken, whose activities brought down investment bank Drexel Burnham Lambert and who went to prison for securities fraud.

Rival firm Technology Innovations filed a complaint alleging that three of LeapFrog's popular LeapPad platforms are based on a patent it owns.

The falls wiped out almost all of the strong gains that LeapFrog made on its debut, when it raised $117m and valued itself at $2.6bn.

Mysterious delay

The timing of the revelation has sparked market rumours of sharp practice, possibly by a rival wishing to undermine LeapFrog's performance.

Innovative Technologies filed the complaint on 18 July, though it unaccountably was not delivered to LeapFrog until about two hours before the stock market closed on Thursday.

For its part, LeapFrog has insisted that it took until very late on Thursday evening to analyse the complaint within the company.

LeapFrog has already denied the charge of infringement, and says it will defend itself in court if need be.