Posted on 14 Feb 2013 by Neilson
Facebook Inc., facing multiple shareholder lawsuits related to its botched initial public offering, scored an initial legal victory when a federal judge in New York on Wednesday dismissed a group of cases against the social- networking company.
Last year, several Facebook investors sued the company, arguing that Facebook, which had shared internal financial forecasts with certain analysts prior to the IPO, was also obligated to disclose those projections in regulatory filings.
U.S. District Judge Robert Sweet ruled that a group of four lawsuits didn't show that Facebook's board members had a duty to disclose these forecasts in its filings. Also, the judge said the company had already "made express and extensive warnings" related to the challenges in its mobile business.
For Facebook, the ruling could be an indicator of how the Southern District of New York, which is handling all of the shareholder lawsuits, may rule on other cases.
The original lawsuits, most of which have now been consolidated into one case, leaned heavily on the same argument, according to Richard Bernstein, a lawyer at Willkie Farr & Gallagher LLP representing Facebook.
"This allegation of so-called selective disclosure has been the dominant allegation in every case filed to date," said Mr. Bernstein in an interview Wednesday.
An attorney representing one of the shareholders wasn't immediately available for comment.