Posted on 05 Mar 2013 by Neilson
Facebook has been hit with a new shareholder lawsuit over the social networking company's botched IPO and is seeking to hold CEO Mark Zuckerberg, directors and officers responsible for the damage, reports Reuters.
The lawsuit, by Gaye Jones, alleges that the company's directors knew that Facebook did not disclose weaker revenue trends as more users accessed the website through mobile devices. The complaint alleges that information had been selectively shared with the company's IPO underwriters and key investors.
“The defendants were unjustly enriched because they realized enormous profits and financial benefits from the IPO, despite knowing that reduced revenue and earnings forecasts for the company had not been publicly disclosed to investors,” said the complaint.
Shares in Facebook’s highly anticipated IPO fell from the initial price of $38 to about $25 within a month. The stock closed on Monday at $27.72 on Nasdaq, down 6 cents.
Soon after the May IPO, which was also marked by technical glitches on the Nasdaq exchange, more than 50 investor lawsuits were filed. A proposed class action is being heard in federal court in Manhattan.
Jones’ lawsuit is a derivative case, meaning the investor seeks to step into the shoes of the company and any money recovered from Zuckerberg and others would be paid to Facebook, not shareholders.