Facebook is in some legal hot water.
Facebook and its underwriters have been hit with approximately 50 lawsuits over its troubled initial public offering, the Wall Street journal is reporting, citing lawyers working on the cases. To make matters worse, the Journal's sources say that the brokers and financial firms that pushed investors to buy Facebook shares could face arbitration claims from those same buyers.
According to the Journal, it had a chance to look through some of the lawsuits, and many of them take aim at Facebook and its chief underwriter, Morgan Stanley, for failing to adequately warn investors how mobile usage could negatively impact the company's financials.
The issue at play is that Facebook hasn't been able to adequately monetize mobile products, despite more and more people using smartphones and tablets to access the company's services. Earlier this week,to offer carrier billing through mobile devices in an attempt to do a better job of monetizing them. Facebook CEO Mark Zuckerberg also said recently that his company is now mobile-focused and will do a better job of making cash on smartphones and tablets.
Facebook's IPO in May was one of the most anticipated events of the year. But after the shares went off at $38, they gained only for a short period before hovering at their opening price for much of the first day. Since then, Facebook's stock has fallen off a cliff, closing the day yesterday at $20.28.
That lawsuits have been flying isn't all that surprising. In fact,over charges that it concealed information relevant to their decision to potentially buy shares in the company.
For its part, Facebook has said that the charges are "without merit," and it has acted within the legal constraints. Morgan Stanley, which is also in the crosshairs, also says that it acted legally.
CNET has contacted Facebook for comment on the Journal's report. We will update this story when we have more information.