Facebook, bankers want IPO lawsuit thrown out of court

The social network and its underwriters have asked the court to throw out a lawsuit that claims the company misled investors prior to its IPO, Reuters reports.

Facebook and the banks that financed its IPO want a judge to put the brakes on a slew of lawsuits filed by unhappy investors.

In court documents released Wednesday, Facebook claimed it was not required to reveal its own forecasts on how its mobile and product strategy might affect future sales, Reuters said today, even if that information had been disclosed to its underwriters.

Facebook is facing a host of lawsuits claiming that it misled investors about its financial health before it went public last year. Morgan Stanley and other underwriters are also targeted in many of the suits, blaming them for not warning investors on how the mobile market could hurt the company's financial condition. Last October, the lawsuits were consolidated so that they could be heard by a single federal judge in Manhattan.

Through the court documents, Facebook and its underwriters argued that the lawsuit should be thrown out in part because the Securities and Exchange Commission does not require the type of broad disclosure sought by the plantiffs.

"Plaintiffs would have this court impose -- retroactively -- a rule which the SEC has for decades thoughtfully rejected," the papers said, according to Reuters. "This court should decline the invitation."

Facebook will report its first-quarter earnings Wednesday afternoon.

About the author

Journalist, software trainer, and Web developer Lance Whitney writes columns and reviews for CNET, Computer Shopper, Microsoft TechNet, and other technology sites. His first book, "Windows 8 Five Minutes at a Time," was published by Wiley & Sons in November 2012.


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