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Judge: Facebook lawsuit over botched IPO can go on

After the social network and banks that financed its 2012 IPO tried to get a slew of shareholder lawsuits tossed, a judge rules that the unhappy investors' claims are legitimate.

The saga over Facebook's bungled initial public offering in May 2012 continues. US District Judge Robert Sweet has ruled the lawsuit can continue -- despite Facebook and bankers' intentions to get it thrown out, according to Reuters.

The social network became embroiled in this extensive legal battle 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.

Dozens of shareholders sued Facebook claiming it failed to disclose in the critical days leading up to the IPO that there was "a severe and pronounced reduction" in forecasts for the company's revenue growth.

In February of this year, Sweet ruled in favor of Facebook and dismissed a group of these cases saying the social network had no obligation to release its revenue growth forecasts in four of the shareholder lawsuits. The company had already "made express and extensive warnings" regarding obstacles to its mobile business, the judge said.

However, Facebook still had the remaining lawsuits to deal with and was even sued by other shareholders since then. Sweet's most recent decision was made public Wednesday but was written on December 11.

"The company's purported risk warnings misleadingly represented that this revenue cut was merely possible when, in fact, it had already materialized," Sweet wrote in his 83-page decision, according to Reuters. "Plaintiffs have sufficiently pleaded material misrepresentation(s) that could have and did mislead investors regarding the company's future and current revenues."

The lawsuit includes more than 40 defendants, such as Facebook CEO Mark Zuckerberg, Facebook COO Sheryl Sandberg, Morgan Stanley, Goldman Sachs, and JPMorgan Chase.

When contacted by CNET, a Facebook spokesperson said, "We continue to believe this suit lacks merit and look forward to a full airing of the facts."

Updated at 2:45 p.m. PT with comment from Facebook spokesperson.