Tuesday, March 5, 2013

Facebook new lawsuit

Facebook has been hit with a new IPO suit. An early investor files a new case against the social network saying, "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."

Reuters reported that Investor Gaye Jones filed a new case against Facebook Chief Executive Mark Zuckerberg and the company's underwriters.

Facebook said in a statement that "we believe this lawsuit is without merit and will defend ourselves vigorously."

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 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.

The lawsuit was filed in the Court of Chancery in Delaware, where Facebook is incorporated, and also named as defendants the IPO underwriters - units of JPMorgan Chase & Co, Morgan Stanley and Goldman Sachs Group Inc.

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