- U.S. judge rules investors may sue as a group over 2012 IPO
- Company accused of hiding concerns about future growth
Facebook Inc. must face group claims by investors that the company misled them about its financial condition in the run-up to its May 2012 initial public offering, a judge ruled.
U.S. District Judge Robert Sweet in Manhattan certified two sets of cases as group lawsuits, allowing investors to sue collectively, in an opinion dated Dec. 11 and made public Wednesday. The decision makes it easier for retail and institutional investors to recover on claims that may not have been worthwhile to pursue individually.
Investors in the class-action suits say they lost money after Facebook, along with Chief Executive Officer Mark Zuckerberg and other executives, overstated the prospects for earnings and growth in the mobile market before the IPO, artificially inflating the value of the company’s shares.
Facebook has appealed, Vanessa Chan, a spokeswoman for the Menlo Park, California-based company, said in an e-mailed statement. “We believe the class certification is without merit,” she said.
The case is In re Facebook Inc. IPO Securities and Derivative Litigation, 12-md-02389, U.S. District Court, Southern District of New York (Manhattan).