Facebook faces new lawsuit over IPO disclosures
(CBS News) - Facebook has been served with another lawsuit related to its IPO by investors who claim the company's executives and its bankers misled them by "selectively disclosing" material information about its revenue outlook.
The lawsuit (see below), which was filed Friday in U.S. District Court for Southern New York, is based on reports that, in the days before the public offering, the lead underwriter for the deal
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In response to the legal action, a Facebook spokesperson said, "We believe the lawsuit is without merit and will defend ourselves vigorously."
Facebook, Zuckerberg sued over IPO
Facebook, which reported in March that more than half its 900 million members were using mobile devices to access the network, updated its filings with the Securities and Exchange Commission in early May to say that the
Facebook amends IPO filing: Mobile a growing problem
The lawsuit, which seeks class action status, points out that the revision to Facebook's prospectus warned that a reduction in advertiser spending could have an adverse effect on revenue. But, the lawsuit alleges, the company omitted the fact that it was already "experiencing a severe and pronounced reduction in revenue growth" due to a shift in Web site usage from traditional PCs to mobile devices.
Defendants failed to disclose in the Registration Statement and Prospectus that, during the roadshow conducted in connection with the IPO, certain Underwriter Defendants reduced their second quarter and full year 2012 performance estimates for Facebook. These reductions were material information which was not shared with all Facebook investors. Rather, this information was selectively disclosed by defendants to certain preferred investors, but it was omitted from the Registration Statement and Prospectus.
In addition to the lawsuits against Facebook, a Maryland investor is
Facebook IPO investor sues Nasdaq over trading delays
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