Zuckerberg and Big Banks Hit with Lawsuits after Suspicious Facebook Stock Launch
Friday, May 25, 2012
(photo: Zef Nikolla, AP)
The fallout from Facebook’s Initial Public Offering (IPO) now includes three lawsuits filed against the social media giant and the banks that helped it go public.
At least three shareholder lawsuits allege Facebook and its creator Mark Zuckerberg “failed to disclose material information about its growth prospects,” according to The New York Times. The litigation also names the three leading underwriters of the IPO: Morgan Stanley, JPMorgan Chase and Goldman Sachs.
One of the lawsuits claims Facebook shared important information with certain investors before the company’s stock began trading, but not with the public at-large. The plaintiffs claim that Facebook was “experiencing a severe and pronounced reduction in revenue growth due to an increase of users of its Facebook app or website through mobile devices rather than a traditional PC such that the Company told the Underwriter Defendants to materially lower their revenue forecasts for 2012.”
The allegation may represent a violation of federal securities law. In addition to the lawsuits, the Securities and Exchange Commission is examining how the IPO was handled.
Facebook shares opened at $38, but then fell by more than 18% in the first three days of trading.
To Learn More:
Class Claims Facebook, Banks Played Favorites (by Robert Kahn, Courthouse News Service)
Facebook Advised Analysts to Cut Forecasts before Float (by Olivia Oran and Nadia Damouni, Reuters)
The Facebook I.P.O.’s Potential Legal Exposure (by Peter J. Henning and Steven M. Davidoff, New York Times)
Questions of Fair Play Arise in Facebook’s I.P.O. Process (by Evelyn M. Rusli, Ben Protess and Michael J. De La Merced, New York Times)
10 Reasons To Be Suspicious About Wall Street's Facebook Fiasco (by Richard Eskow, Campaign for America’s Future)
- Top Stories
- Unusual News
- Where is the Money Going?
- U.S. and the World
- Appointments and Resignations
- Latest News
- Obama Lets U.S. Companies Arm another Dictatorship
- National Intelligence Director Clapper Suspected of Creating New Obstacle to Release of Censored Pages from 9/11 Report
- Rate of Adult Smokers in U.S. Takes Biggest Plunge in 20 Years
- Chicago Police Use of Computer-Predictions of Shooters and Victims Prompts Civil Liberties Concerns
- Troubled TSA Seen as Making Superficial Fix in Replacement of Controversial Security Chief