New Facebook lawsuit claims company hid weak revenue
A television crew prepares for a broadcast in front of a ‘like’ sign outside Facebook headquarters May 18, 2012 in Menlo Park, California. The eight-year-old social network company listed their initial public offering on NASDAQ at $38 a share, a valuation of $104 billion, making its IPO the third largest in U.S. history after General Motors and Visa.
When Facebook isn't busy trying to get you to pay extra for sharing items in your Newsfeed, it's getting sued. Yet another investor is suing Facebook over its bungled IPO controversy, Reuters reported. The lawsuit, filed by Facebook shareholder Gaye Jones, alleges that Mark Zuckerberg and others knew that Facebook was failing to disclose its weak revenue trends.
Similar lawsuits have already been filed and were dismissed last month, but this lawsuit is different. While the other lawsuits were filed by people who did not own stock when the alleged misconduct took place, Jones did own stock at the time, Reuters said.
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“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,” the complaint says.
Facebook’s initial shares fell from about $38 to around $25 in a month after it was introduced in May, the Epoch Times reported. More than 50 investor IPO lawsuits have been filed against Facebook since then.
US District Judge Robert Sweet was assigned 42 of those cases and he consolidated them in October. In December, he picked a handful of plaintiffs to lead the class action lawsuits, CNET reported. But last month, Sweet ruled in Facebook's favor and dismissed the bulk of those lawsuits.