Morgan Stanley, Goldman Sachs Sued Over Facebook IPO
By Don Jeffrey - May 23, 2012 9:49 AM ET
Morgan Stanley (MS), Goldman Sachs Group Inc. (GS) and JPMorgan Chase & Co. were sued along with other underwriters and Facebook Inc. (FB) by investors who claimed they were misled in the purchase of the social network firm’s stock.
The investors said the members of a proposed class action, or group lawsuit have lost more than $2.5 billion since the initial public offering last week, according to a complaint filed today in Manhattan federal court.
Also sued were units of Bank of America Corp. and Barclays Plc (BARC), and members of Facebook’s board, according to the filing. Facebook went public at $38 a share. While the stock rose 1.5 percent and raised $16 billion in the IPO, it plunged 19 percent over two days. Today, Facebook rose 3.5 percent, or $1.10, to $32.10 at 9:41 a.m. New York time in Nasdaq trading.
“The true facts at the time of the IPO were that Facebook was then experiencing a severe and pronounced reduction in revenue growth,” the plaintiffs said in the complaint.
A Facebook investor sued Nasdaq OMX Group Inc. yesterday in the same court, saying the exchange “badly mishandled” trades in Facebook stock.
The underwriter case is Brian Roffe Profit Sharing Plan v. Facebook, 12-04081; the Nasdaq case is Goldberg v. Nasdaq OMX Group Inc., 12-CV-04054, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Don Jeffrey in Manhattan federal court at djeffrey1@bloomberg.net
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net
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