Facebook, Zuckerberg and Morgan Stanley get Sued by Investors
Suit filed against the social media giant over withholding negative information from the public for its IPO
This wasn’t supposed to go like this. Facebook, the internet darling and the savior of high-tech IPOs, was supposed to go gangbuster on the financial world. Investors expected to get in early and get rich quickly, but sometimes things don’t go according to plan, especially when greed is concerned.
Yesterday news broke out that Facebook, Morgan Stanley and a host of other underwriters withheld negative information about the social network’s initial public offering. On Wednesday, three investors sued Facebook and their CEO Mark Zuckerberg, along with Morgan Stanley, for unfair conduct.
"It appears as though material information was not disclosed," said Robert Weiser, one of the plaintiff lawyers in the class action suit. "We believe that the offering was conducted unfairly and it harmed public stockholders."
According to reports of the suit, which has been filed in the U.S. District Court for the Southern District of New York in Manhattan, Morgan Stanley shared negative information regarding Facebook’s upcoming quarter results with major clients ahead of their IPO, while withholding this information from the public.
The "revisions were material information which was not shared with all Facebook investors, but rather, was selectively disclosed by defendants to certain preferred investors and omitted from the registration statement and/or prospectus," the plaintiffs claim.
Other underwriters targeted by the lawsuit include JPMorgan Chase, Bank of America, Merrill Lynch, Barclays Capital and Goldman Sachs.
It is believed that more plaintiffs may join the class action lawsuit.