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Uploaded: Monday, May 28, 2012, 3:08 PM
Facebook IPO draws lawsuits
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by Sandy Brundage
Almanac Staff
The anticipation over Facebook's May 18 IPO quickly nosedived into dissatisfaction, judging by the multiple class action lawsuits the social networking company now faces.
The suits allege that Facebook provided false and misleading statements in documents filed with the Securities Exchange Commission and made available to the public prior to the stock offering. In addition, according to the lawsuits, the company allegedly gave a private heads-up to lead underwriters, including Morgan Stanley and Goldman Sachs, who then decreased their revenue projections. The lawsuits allege that the underwriters told a handful of select investors about the change, but not the public.
The class action suits, two of which were filed in San Mateo Superior Court, call for compensatory damages. Case management conferences have been scheduled for July 25 and Oct. 4.
Facebook's stock continued to decline as news of the lawsuits circulated. By Friday (May 25) the price had dropped to $31.75 per share, after opening on May 18 at $42.05 on NASDAQ.
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Posted by incompetent or corrupt?, a resident of the Menlo Park: Downtown neighborhood, on May 28, 2012 at 4:05 pm Corrupt price manipulation? Or incompetent IPO? Or both?
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Posted by friended, a resident of the Menlo Park: Felton Gables neighborhood, on May 28, 2012 at 4:49 pm Wasn't the company, they put the info into the S1. Was the banksters.
Be an interesting trial. My guess is they settle.
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Posted by Jim, a resident of the Menlo Park: Park Forest neighborhood, on May 29, 2012 at 5:29 pm The whole world of stocks is suspect! Companies can virtually print money. They should have to borrow money like everyone else has to. In this case, Facebook and its partner IPO firms got too greedy and priced the stock too high, and they issued way too much stock. If the world of stocks is somehow necessary, there should be a law that companies can't issue stocks to their own officers and managers and employees. Consider: The whole reason for selling stocks is to help finance a company's growth, not make its founders rich. Because Zuckerberg was given so much stock, he, and not the private buyers of the stock, owns the controlling interest in the company. If you like gambling, stocks are for you.
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