Shareholders sue Facebook, banks for hiding facts
23 May 2012
The shareholders of Facebook Inc have filed a lawsuit against the company, co-founder and CEO Mark Zuckerberg and several banks, including lead underwriter Morgan Stanley, in the US district court in Manhattan today.
The lawsuit claims shareholders were duped by the hiding of Facebook's weakened growth forecasts.
"The allegations, if true, are a matter of regulatory concern," said Rick Ketchum, the head of the Financial Industry Regulatory Authority.
Mary Schapiro, head of the Securities and Exchange Commission, said: ''There is a lot of reason to have confidence in our markets and the integrity of how they operate, but there are issues we need to look at specifically with regard to Facebook.
Facebook started trading on 18 May following a record initial public offer that valued the social network higher than almost every company in the Standard & Poor's 500 Index (See: Facebook to open trading today on Nasdaq).
Facebook sold 421.2 million shares at $38 apiece to reach $16 billion. That valued the Menlo Park, California-based company at $104.2 billion, more than every S&P 500 member except Amazon.com Inc and Equity Residential.