Zuckerberg Faces Another Lawsuit
Bangalore: Facebook CEO, Mark Zuckerberg is again facing a lawsuit over its troubled IPO, reviving legal claims that courts dismissed in February.
The lawsuit by Gaye Jones alleges that the Facebook did not disclose weaker revenue trends, as the site is accessed more through mobile phones. The complaint also states that information has been selectively shared with company’s IPO underwriters and key investors.
Shareholder Gaye Jones had owned Facebook stock since February 2012, leaving a complaint that was not similar to the ones dismissed last month, that was of shareholders not owning the stock when the alleged misconduct took place prior to Facebook’s May IPO.
The lawsuit is to make the directors to force out the money they made from selling stock through the IPO, which they knew was overpriced.
The complaint said that the defenders were unjustly enriched because they realized enormous profits and financial benefits from the IPO had not been disclosed to investors.
Facebook’s highly anticipated IPO shares fell from initial price of $38 to $25 within a month. The stock has closed on Monday at $27.72 on NASDAQ, down by 6 cents.
After the IPO was marked by technical glitches, on the NASDAQ exchange, more than 50 investor lawsuits were filed. This lawsuit is being heard in federal court in Manhattan.
Jones Lawsuit is however a derivative case where the investor is trying to know the company and money recovered from Zuckerberg, through settlements which would be payed to Facebook and not Shareholders.
There were four similar cases that were dismissed last month by Robert Sweet, U.S. district court judge in Manhattan.
Also noting that shareholders did not own stock prior to the IPO, Sweet said that even if plaintiffs had claimed Facebook hid information from investors, there were repeated extensive warnings about the increased use of mobile applications.
The lawsuit was filed in the court of Chancery, Delaware, where Facebook is known as defending the IPO underwriters – units of JP Morgan chase & Co, Morgan Stanley and Goldman Sachs Group.
However, JP Morgan, Goldman and Morgan Stanley declined to comment. The case is Gaye Jones vs. Mark Zuckerberg et al, Delaware Court of Chancery, No. 8375 as stated by TOI.
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