DHAKA: Facebook and banks including Morgan Stanley were sued by the social networking leader’s shareholders, who claimed the defendants hid Facebook’s weakened growth forecasts ahead of its US$16 billion initial public offering (IPO).
The defendants, who also include Facebook chief executive officer Mark Zuckerberg, were accused of concealing from investors during the IPO marketing process ‘a severe and pronounced reduction’ in revenue growth forecasts, resulting from increased use of its app or website through mobile devices. Facebook went public last week.
The lawsuit was filed in United States (US) District Court in Manhattan on Wednesday, according to a law firm for the plaintiffs.
A day earlier, a similar lawsuit by a different investor was filed in a California state court, according to a law firm involved in that case.
In the New York case, shareholders said research analysts at several underwriters had lowered their business forecasts for Facebook during the IPO process, but that these changes were ‘selectively disclosed by defendants to certain preferred investors’ rather than to the public generally.
BDST: 1341 HRS, MAY 24, 2012
Edited by Robab Rosan, Cultural Affairs Editor