Judge tosses some shareholder suits over Facebook's IPO flop
Several class action lawsuits against the social network are dismissed when judge rules Facebook "made express and extensive warnings" about its revenue growth before its IPO.
Things may be looking up for Facebook in the dozens of lawsuits it's facing from peeved shareholders over its botched initial public offering.
U.S. District Judge Robert Sweet ruled in favor of Facebook today and dismissed a group of these cases, according to the Wall Street Journal.
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. Defendants in the lawsuits, many of whom are investors, claim Facebook failed to disclose in the critical days leading up to the IPO that there was "a severe and pronounced reduction" in forecasts for Facebook's revenue growth.
According to the Wall Street Journal, Judge Sweet ruled today that Facebook 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.
Originally, 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.The majority of these lawsuits rely on the argument that Facebook failed to disclose its revenue growth forecasts in the days before its IPO. However, it's unclear if Sweet will rule the same for all of these cases. Throughout the process, Facebook has maintained that it's innocent of any wrongdoing.
When contacted by CNET, a Facebook representative said, "We are pleased with the court's ruling."
Update, 5:40 p.m. PT: Adds comment from Facebook representative.