Facebook and banks behind flotation face lawsuit
Published: 23rd May 2012 15:57:37
Facebook, its founder Mark Zuckerberg, and the banks leading its flotation are being sued by disgruntled shareholders.
A writ, filed in a Manhattan court, alleges that Facebook's revised growth figures were not disclosed to all investors.
US financial regulators have already said the Morgan Stanley may have questions to answer over the disclosure of information ahead of Friday's float.
The bank, lead underwriter to Facebook, said it fully complied with the rules.
The lawsuit claims that defendants concealed from investors during the flotation marketing process "a severe and pronounced reduction" in revenue growth forecasts.
It is the latest problem to dog one of the most anticipated stock market listings of recent times.
The flotation was disrupted on Friday by technical glitches on the Nasdaq stock exchange. The share price has since slumped amid worries that the company was over-valued by advisers marketing the float.
On Tuesday, the leading financial regulator in Massachusetts issued a subpoena to Morgan Stanley as part of an investigation into whether its analysts selectively disclosed revised revenue forecasts for Facebook.
Now, a group of investors has issued a class-action lawsuit alleging that Facebook revenues were revised down because of a surge in the number people using mobile devices for apps and connection to websites.
Morgan Stanley has not yet commented on the latest lawsuit.
On Tuesday, in response to the Massachusetts subpoena, said the company was "in compliance with all applicable regulations" and had "followed the same procedures for the Facebook offering that it follows for all initial public offerings".
Meanwhile, there was some good news at the start of trading on Wall Street, with Facebook shares up 3.4% at $32 shortly after the opening bell.
The shares listed at $38-a-share, and fell as low as $31 on Tuesday.
At 12:58:39 in EnglandA poem about the killing of PC Keith Blakelock during riots in north London was written by the man accused of his murder, a court has heard.
At 12:58:21 in SportKent have announced a pre-interest and pre-tax profit of £156,778 for the financial year to November 2013.
At 12:56:04 in ScotlandA hamster has been found abandoned inside a plastic play tube in Edinburgh.
At 12:55:09 in BusinessThe sometimes fraught relationship between leaseholders and their freeholders is going to be investigated by the Office of Fair Trading (OFT).
At 12:54:04 in HeadlinesIndia's Supreme Court has ordered the continuing detention of businessman Subrata Roy and asked his firm to come up with a plan to repay its investors.
At 12:53:21 in SportCrystal Palace winger Jason Puncheon has been fined £15,000 by the Football Association and warned about his future conduct for Twitter comments he made in relation to former boss Neil Warnock.
At 12:52:43 in HeadlinesA second witness at the murder trial of South African athlete Oscar Pistorius has told a court in the capital Pretoria she was awoken by the sounds of a fight early on 14 February 2013.
At 12:42:01 in PoliticsThere is a risk that "deliberate provocation" could give rise to a dangerous incident in Ukraine, Foreign Secretary William Hague has warned.
At 12:41:48 in EnglandA residential treatment programme for addicts which closed in Yeovil is to reopen after the charity running it merged with another organisation.
At 12:40:03 in ScotlandPolice Scotland has exceeded its target to recruit 1,000 additional officers.
Harvard CitationBBC News, 2012. Facebook and banks behind flotation face lawsuit [Online] (Updated 23rd May 2012)
Available at: http://www.ukwirednews.com/news/1430436/Facebook-and-banks-behind-flotation-face-lawsuit [Accessed 10th Mar 2014]
News In Other Categories
India's Supreme Court has ordered the continuing detention of businessman Subrata Roy and asked his firm to come up with a plan to repay its investors.
A hamster has been found abandoned inside a plastic play tube in Edinburgh.
Fawlty Towers star Prunella Scales has "a sort of mild Alzheimer's", her husband Tim West has revealed in the Radio Times.
There is a risk that "deliberate provocation" could give rise to a dangerous incident in Ukraine, Foreign Secretary William Hague has warned.
The sometimes fraught relationship between leaseholders and their freeholders is going to be investigated by the Office of Fair Trading (OFT).
A poem about the killing of PC Keith Blakelock during riots in north London was written by the man accused of his murder, a court has heard.