Lawsuits pile up over Facebook flotation

May 23, 2012
Facebook co-founder Mark Zuckerberg pictured on a screen getting ready to ring the NASDAQ opening bell in New York's Times Square on May 18. Facebook and its underwriters came under broad legal attack Wednesday as lawyers and investors filed lawsuits over Facebook's flop controversy-marred initial public offering.

Facebook and its underwriters came under broad legal attack Wednesday as lawyers and investors filed lawsuits over Facebook's controversy-marred initial public offering.

At least three said they were filing actions against Facebook and its underwriters after the $16 billion flopped amid accusations that the lead underwriters and the company itself hid material information from investors.

Facebook went public Friday in the country's second largest IPO ever.

But the shares plunged 18 percent over the first three trading sessions, driving allegation that that large had received privileged analyses from underwriters that drove them to dump the shares, while small investors paid the price.

New York-based Robbins Geller Rudman & Dowd said they had filed an complaint against Facebook and company officials with violating securities laws in New York's district court.

"The complaint alleges that the Registration Statement and Prospectus issued in connection with the IPO were false and misleading in violation of the Securities Act," Robbins Geller said.

New York-San Francisco firm Lieff Cabraser Heimann & Bernstein said they had lodged a class action suit against Facebook, company officials, and underwriters also for alleged violations in the registration statement and prospectus.

A third firm, Los Angeles-based Glancy, Binkow & Goldberg, said they had filed a similar complaint both against the company and underwriters.

All three said the suits were filed on behalf of investors generally, but all were also appealing for investors to join the suits.

Robbins Geller said that anyone wanting to serve as lead plaintiff in the case had 60 days to register.

Legal firms in the United States frequently file such class action even as they seek plaintiffs

Often, too, competing suits are combined into one action.

Explore further: Where are Facebook's friends? Stock down after IPO (Update)

Related Stories

Facebook investors to cash out more shares

May 16, 2012

(AP) -- Insiders and early Facebook investors will be unloading more of their shares in the initial public offering, the company said Wednesday, as they take advantage of investor demand.

Recommended for you

Technology near for real-time TV political fact checks

January 18, 2019

A Duke University team expects to have a product available for election year that will allow television networks to offer real-time fact checks onscreen when a politician makes a questionable claim during a speech or debate.

Privacy becomes a selling point at tech show

January 7, 2019

Apple is not among the exhibitors at the 2019 Consumer Electronics Show, but that didn't prevent the iPhone maker from sending a message to attendees on a large billboard.

China's Huawei unveils chip for global big data market

January 7, 2019

Huawei Technologies Ltd. showed off a new processor chip for data centers and cloud computing Monday, expanding into new and growing markets despite Western warnings the company might be a security risk.

7 comments

Adjust slider to filter visible comments by rank

Display comments: newest first

Lurker2358
2.3 / 5 (3) May 23, 2012
Waddaya know, idiots, I was right.

Facebook has almost no real value. It never did.

Facebook's entire income, nearly anyway, is based on the perception of advertisers believing all people are brainwashed puppets who buy and sell based on commercial ads.

Thankfully, not everyone is so weak minded.

The company is severely over-valued, and it's as much the fault of the exchange as it is Facebook itself. The exchange should be sued first of all, for promoting the false notion that "value" and "cost" are the same things. They aren't.
Telekinetic
3 / 5 (2) May 23, 2012
I can understand a greenhorn buying shares in the Brooklyn Bridge, but this?...
LariAnn
1 / 5 (1) May 23, 2012
Wake me up when FB reaches $10/share. I might consider buying some at that time.
Odie_wan
not rated yet May 23, 2012
Zucky and his boys all are cackling all the way to the bank, quoting P.T Barnum: "There's a sucker born every minute".
chardo137
5 / 5 (1) May 23, 2012
Long Live Google Plus...
Facebook, not so much!
alfie_null
not rated yet May 24, 2012
Think I'd like to invest in law firms.
antialias_physorg
1 / 5 (1) May 24, 2012
A website without a business model doesn't do so hot on the stock market? Well, Duh!

But as soon as someone says 'billions' the carrion-eaters (lawyers) come out of the woodwork. Figures.

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.