Facebook is off the IPOcalypse hook... for NOW
Judge dismisses 4 lawsuits over firm's float flop
A US judge has thrown out a set of four shareholder cases against Facebook, Mark Zuckerberg and other senior staff over its IPOcalypse, and although it still faces many more, things are looking up for Zuck.
All four suits rested on allegations that the social network and its officers had withheld certain information from shareholders about how poorly its numbers were looking in light of the consumer shift to mobile devices.
But Judge Robert Sweet said that the specific shareholders involved in the suits had bought their Facebook stocks on the day they went public, and by that time the firm had already "made express and extensive warnings" in its IPO filing over its unproven ability to make money on mobiles devices.
The judge said that by the time the first stock trading rolled around, the facts were out.
The group of four lawsuits are among many that have been brought against Facebook and the NASDAQ exchange over the social network's much-anticipated and ultimately dismal IPO. The ruling could be a sign of the general direction of future cases in the Southern District of New York — which is handling all the shareholder suits. The shares have not yet recovered to the initial $38 price-tag Facebook put on them.
On the day, a combination of technical hiccups at NASDAQ and rumours circulated by analysts that Facebook had lowered its guidance (the analysts then passed them on to their larger clients) left most investors feeling a wee bit shafted.
In a separate class action suit against NASDAQ over the alleged negligence in the design of its trading systems, Sweet has denied an attempt to get the case moved to the New York Supreme Court.
When Facebook's shares went live, the software mucked up, delaying all kinds of trades so that investors and brokers didn't know how much they'd bought or sold or at what price. In some cases, sell orders earlier in the day that were processed hours later would have seen a significant decrease in price. ®