Facebook Sued by Investors Over IPO
Facebook faced more bad news Wednesday in the wake of its botched initial public offering. Shareholders filed a lawsuit against the social networking company, lead underwriter Morgan Stanley and several other Wall Street banks, alleging that they misled them about Facebook’s revenue projections ahead of the IPO. JPMorgan Chase and Goldman Sachs were also named in the suit, which was filed in U.S. District Court in Manhattan.
Facebook shares closed up 3.2 percent at $32 on Wednesday, down nearly 16 percent from their IPO price of $38. –TEB
Wait, before you go…
The legal action accused the defendants, including Facebook Chief Executive Mark Zuckerberg, of concealing “a severe and pronounced reduction” in revenue growth forecasts resulting from increased use of Facebook’s app or website through mobile devices.
Facebook was also accused in the lawsuit of telling its bank underwriters to “materially lower” forecasts for the company.
“The main underwriters in the middle of the road show reduced their estimates and didn’t tell everyone,” said Samuel Rudman, a partner at Robbins Geller Rudman & Dowd, which brought the lawsuit. “I don’t think any investor in Facebook wouldn’t have wanted to know that information.”
Andrew Noyes, a Facebook spokesman, said: “We believe the lawsuit is without merit and will defend ourselves vigorously.”
If you're reading this, you probably already know that non-profit, independent journalism is under threat worldwide. Independent news sites are overshadowed by larger heavily funded mainstream media that inundate us with hype and noise that barely scratch the surface. We believe that our readers deserve to know the full story. Truthdig writers bravely dig beneath the headlines to give you thought-provoking, investigative reporting and analysis that tells you what’s really happening and who’s rolling up their sleeves to do something about it.
Like you, we believe a well-informed public that doesn’t have blind faith in the status quo can help change the world. Your contribution of as little as $5 monthly or $35 annually will make you a groundbreaking member and lays the foundation of our work.Support Truthdig
There are currently no responses to this article.
Be the first to respond.