Federal judge throws out shareholder lawsuits against Facebook
A US federal judge on Wednesday tossed out claims by some Facebook shareholders that the social network wasn’t candid enough about risks faced by the company when it made its stock market debut.
In his ruling, US District Court Judge Robert Sweet in New York said Facebook executives disclosed the required information before the plaintiffs decided to become early investors.
The suits dismissed by Sweet were part of an onslaught of litigation that followed Facebook’s disastrous $16 billion IPO in May.
More than half a dozen law firms specializing in investor complaints launched class action lawsuits against the social networking giant and its underwriters.
Suits alleged that Facebook, along with Morgan Stanley, Goldman Sachs and other big Wall Street banks that distributed the shares, withheld from smaller investors crucial forecasts that pointed to weaker growth for the social network, while sharing the information with big institutional clients.
Facebook has vehemently defended itself against the claims.
Investors had hoped to turn quick and easy profits on the shares when they hit the market, given the lengthy buildup and how previous IPOs by tech giants like Google and LinkedIn rocketed upward.
But the launch flopped, the price barely staying above the $38 level in the first day of trade and then plunging during the next two sessions.
Facebook shares hit a low of $17.55 in September but have regained ground, trading at $27.91 at the close of the Nasdaq on Wednesday.