Facebook served new lawsuit over bungled IPO
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."
Just when it seemed like the Facebook shareholder lawsuits were easing up, the social network has been hit with a new IPO suit.
Investor Gaye Jones filed a new case against Facebook Chief Executive Mark Zuckerberg and the company's underwriters today, according to Reuters. Like several other investors that have sued Facebook, Jones claims that the social network knew about its weak revenue trends before its IPO but failed to disclose this information.
"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," the complaint said, according to Reuters.
The social network became embroiled in extensive legal battles shortly after its $16 billion IPO last May. The company's stock opened on the Nasdaq priced at $38 a share and, aside from a slight uptick right at the start, proceeded to plummet in the days and weeks following. Defendants in these lawsuits all claim that Facebook didn't announce in the critical days leading up to the IPO that there was "a severe and pronounced reduction" in forecasts for Facebook's revenue growth.
Originally, U.S. District Judge Robert Sweet was assigned 42 cases filed against the social network, but he consolidated them in October. In December, he picked a handful of plaintiffs to head the class action suits, which include several state pension funds.
Last month, Judge Sweet ruled in favor of Facebook and dismissed a group of these lawsuits. The judge said that Facebook had no obligation to release its revenue growth forecasts in four of the shareholder lawsuits and that the company had already "made express and extensive warnings" regarding obstacles to its mobile business.
What's different about Jones' suit from these other shareholders' cases is that Jones owned Facebook stock since February 2012, according to Reuters. In the cases that Judge Sweet dismissed last month, the shareholders did not own Facebook stock in the build up to the social network's IPO.
In all of the lawsuits, Facebook has maintained that it's innocent of any wrongdoing. When contacted by CNET today, a Facebook spokesperson said, "We believe this lawsuit is without merit and will defend ourselves vigorously."
According to Reuters, the suit was filed in the Court of Chancery in Delaware and seeks damages from Facebook's directors and underwriters, including units of JPMorgan Chase, Morgan Stanley and Goldman Sachs.