Shareholders of Facebook Inc. (FB), Wednesday filed a class action lawsuit against the company, Morgan Stanley (MS) and other banks which were underwriters to Facebook's $16 billion IPO, alleging that they did not disclose a revised revenue guidance to all investors.
The suit, filed in federal court in Manhattan, New York, alleges that the "Registration Statement and Prospectus contained untrue statements of material facts," and were not prepared according to SEC regulations.
The plaintiff claims that analysts at the underwriters had lowered their second quarter and full year 2012 revenue outlook for Facebook during the IPO marketing process, but these revision were not shared with all Facebook investors, but rather "selectively disclosed by defendants to certain preferred investors." Many people who invested in Facebook on its debut on Friday suffered big losses as the share plunged in days following.
Facebook's shares are currently up about three percent at $31.91, but far below its IPO price of $38 a share. The much anticipated debut of the social networking giant on Friday was also affected by technological glitches on the Nasdaq stock market.
The analysts of underwriters revised Facebook's revenue guidance to reflect the increased number of Facebook users who access the social network through mobiles rather than traditional PCs.
The defendants in the suit include Facebook, Chief Executive Mark Zuckerberg, Financial Chief David Ebersman, Chief Accounting Officer David Spillane, Director Marc Andreessen, Erskine Bowles, James Breyer, Donald Graham, Reed Hastings, Peter Thiel, and underwriters Morgan Stanley, J.P. Morgan, Goldman Sachs, Merrill Lynch, Pierce, Fenner & Smith and Barclays Capital.
FB is currently trading at $31.91, up $0.91 or 2.93%, on a volume of 56 million shares.
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