Facebook sued by investors as disatrous IPO saga continues

Facebook's disastrous first few days as a publicly-traded company continued on Wednesday with news that angry shareholders are suing the company, saying it concealed forcecasts of reduced growth

Facebook and the lead underwriter of its IPO, Morgan Stanley have been hit with lawsuits from angry shareholders over allegations that diminished growth forecasts were withheld before last Friday's stock market floatation.

Some last minute wrangling saw Facebook admit that it was seeing increasing mobile use, but was enjoying less success in ensnaring advertisers through that medium. The result of both would affect how revenues could be expected to grow.

The shareholders, who snapped up the stock at $38 (£25) on Friday, are alleging that this information was deliberately kept from public knowledge by CEO Mark Zuckerberg, Morgan Stanley and fellow underwriters Goldman Sachs and JP Morgan Chase & Co.

The suit alleges that only "preferred investors" were given the tip, while regulators in the United states are also looking into the controversy.

Samuel Rudman, whose firm Robbins Geller Rudman & Dowd filed the writ said: "The main underwriters in the middle of the road show reduced their estimates and didn't tell everyone. I don't think any investor in Facebook wouldn't have wanted to know that information."

Since its floatation on the NASDAQ exchange shares fell a massive 18.5 per cent in the first three days making it the most disatrous IPO in five years and earning the company the nickname 'Fadebook'.

Shares bounced back slightly on Wednesday to close 3 per cent up at just over $32, but still well short of the IPO price.

Via: Washington Post

 

Comments

Be the first to comment…

Back to top
Close
T3 Newsletter
Sign up to recieve the T3 newsletters by entering your details below

Your Details

As you're registering with us. we'd like to think that you'd enjoy receiving the following emails; if you'd rather not receive them, please untick the boxes:

I would like to receive other emails from T3, Future Publishing Limited and it's group companies containing news, special offers and product information
I agree to the terms of use and privacy policy and confirm that I am over 16 years of age *
Close
Log in or Join

By clicking below you agree to our terms and conditions and our privacy policy

Log in to T3.com with your preferred social network

Log in with your T3.com account

CloseJoinPlease complete these additional details

Join T3.com with your preferred social network

OR

Join T3.com

Please tick this box to confirm you are 16 years old or over

Just so we know you're human

Newsletters

I would like to receive T3 email newsletters, packed full of the latest tech news, competitions and exclusive offers.

I would like to receive other emails from T3, Future Publishing Limited and its group companies containing news, special offers and product information.

I would like to receive offers from carefully selected third Parties. We will not share your data with the third party.

Close Edit your profile

Change your password

Newsletters

I would like to receive T3 email newsletters, packed full of the latest tech news, competitions and exclusive offers.

I would like to receive other emails from T3, Future Publishing Limited and its group companies containing news, special offers and product information.

I would like to receive offers from carefully selected third Parties. We will not share your data with the third party.

Social networks

You have authorised these social networks to interact with your T3.com account.

Please ensure you deactivate or revoke access to this website from within your social networks settings to ensure all permissions are removed.

Close Forgotten your password

Forgotten your password?

Please enter the email address that you used to sign up and we'll send you a new password

Close
Forgotten password
Don't have a T3 Account? Join now