Facebook, Banks Ask Judge to Dismiss Investor IPO ClaimsBob Van Voris
Facebook Inc. and a group of banks asked a federal judge to throw out investor claims that the company misled them about its financial condition before last year’s initial public offering.
The investors, led by a group of public pension funds and an investment fund claim the defendants, including Facebook co-founder and Chief Executive Officer Mark Zuckerberg and other company executives, overstated the prospects for earnings and growth in the mobile market before the May 2012 IPO. The investors claim they lost money after the public offering of shares.
The Facebook defendants and a group of more than 30 banks that underwrote the offering asked U.S. District Judge Robert Sweet in Manhattan yesterday to dismiss the investors’ claims. Facebook, based in Menlo Park, California, operates the world’s biggest social network.
The investors “do no better than claim that Facebook misled investors by warning that increased mobile usage and product decisions ‘may negatively affect our revenue,’” the defendants said in a brief filed with the court last night. “There is no plausible basis to claim that this somehow misled the public about what already was known and disclosed about the increase in mobile usage and about product decisions.”
The banks seeking dismissal of the suit include Morgan Stanley, Goldman Sachs Group Inc. and JPMorgan Chase & Co.
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).