Investor Gaye Jones Suing Facebook Over Initial Public Offering
Investor Gaye Jones filed a new lawsuit against Facebook chief executive Mark Zuckerberg and the company's underwriters based on the social networking site’s Initial Public Offering. Jones claims that the company knew about its weakening revenue trends before the IPO but did not disclose the information to potential investors.
"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 reads.
This is just the latest in a string of legal battles that Facebook has faced since its $16 billion IPO last May. The stock was first offered on Nasdaq at a price of $38 per share, but has only gone down since then aside from a very brief price increase early on, reports CNet. The common theme of all the lawsuits against Facebook is that the company knew there was "a severe and pronounced reduction" in its projected revenue growth prior to the IPO but declined to make it public.
U.S. District Judge Robert Sweet was assigned 42 cases filed against the social network and decided to consolidate them in October. Several state pension funds are part of the class actions suits against Facebook. Last month, Judge Sweet ruled in favor of Facebook and dismissed a group of these lawsuits. He ruled that the company had already "made express and extensive warnings" regarding obstacles to its mobile business.
Jones’ suit is different than the others because Jones owned stock in Facebook prior to the IPO. In the cases that Judge Sweet dismissed, stockholders only purchased shares of Facebook after the company went public.
A Facebook spokesperson said, "We believe this lawsuit is without merit and will defend ourselves vigorously."