Social networking giant Facebook will face another lawsuit from investors contending that the company and banks misled them during the IPO, according to a CNET report.
Facebook had its IPO in mid-May and by all accounts, it was a botched affair. Not only did the NASDAQ exchange fizzle because of a volume overload, but also Facebook was accused of not giving enough information about its growth prospects to its non-bank investors. That led to a class-action lawsuit against Facebook and Morgan Stanley. Now there’s a second lawsuit on the table touting a similar argument. It reads:
Defendants failed to disclose in the Registration Statement and Prospectus that, during the roadshow conducted in connection with the IPO, certain Underwriter Defendants reduced their second quarter and full year 2012 performance estimates for Facebook. These reductions were material information which was not shared with all Facebook investors. Rather, this information was selectively disclosed by defendants to certain preferred investors, but it was omitted from the Registration Statement and Prospectus.
The case has been filed in the U.S. District Court for Southern New York, which is also where the first lawsuit was filed. You can read through the filing below: