Facebook facing class action lawsuits over IPO as US judge gives shareholders the go-ahead

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Facebook is facing class action lawsuits over its stock market listing three years ago.

A US federal judge gave the go ahead to two shareholder lawsuits which relate to the growth forecasts given by the social media giant before its initial public offering (IPO).

US District Judge Robert Sweet said both retail and institutional investors who claim they lost money buying Facebook shares at inflated prices can bring legal action as groups.

Class action lawsuits can give those who bring them more leverage to negotiate a settlement.

Facebook said it is disappointed with the decision and is appealing, believing that class certification is “without merit” and conflicts with “well-settled” precedent.

The company listed on the Nasdaq exchange on May 18, 2012.

At the time it was one of the biggest technology IPOs in history, as the shares debuted at $38 each valuing the firm at more than $104 billion (£66 billion).

However, the deal came to be considered a botched job after the Nasdaq suffered a technical glitch and questions were raised about the investment banks invovled and their handling of the listing.

Morgan Stanley, the lead underwriter, was later fined $5 million by the Massachusetts securities regulator for violating securities laws governing how investment research can be distributed, while Nasdaq agreed to pay $41.6 million in claims to market participants that lost money due to its technical problem.

In its first few days as a listed company Facebook’s value plunged by almost 20%.

It took until August 2013 for Facebook shares to surpass their debut price. They were last at $107.26.

Additional reporting by Reuters 

Source Article from http://www.standard.co.uk/business/facebook-facing-class-action-lawsuits-over-ipo-as-us-judge-gives-shareholders-the-goahead-a3145966.html

December 30, 2015 |
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