Facebook sued by shareholders over IPO marketing

May 23, 2012
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Facebook sued by shareholders over IPO marketing

The Facebook IPO has caused quite a stir, although the stock has been met with a tepid response by the market since its debut. The price reached highs of $45, but has slowly dropped below the initial $38 price, currently sitting at $31 at the time of writing. Shareholders don’t seem to be happy either, as Reuters reports that Zuckerberg and several banks have been sued over misleading financial forecasts.

Shareholders believed they’ve been misled over the potential growth of the company, which could have led to an inflated IPO price. The lawsuit was filed in Manhattan, and targets Mark Zuckerberg as well as lead bank Morgan Stanley. The parties involved reportedly withheld “a severe and pronounced reduction” in revenue growth forecasts.

It comes after NASDAQ was sued by an investor yesterday over the fumbling of the entry of Facebook into the market. The investor claims that buy and sell orders didn’t go through properly on the day of the IPO offering, resulting in bad transactions. Philip Goldberg says Facebook trades took “hours” to execute, with investors not knowing if they held Facebook stocks at all.

[via The Next Web]


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