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