Facebook faces seven more class actions

Posted on: June 12th, 2012 by Steve Larson

On May 28, 2012, seven additional securities fraud class actions were filed against Facebook.  The cases were filed in New York and in California.

The complaints allege that only large institutional investors were informed of reduced revenue estimates during the roadshow.  The Facebook IPO went public on May 18, 2012 at $38 per share, and only a few minutes later reached a high of $45 per share.  The complaints allege that on May 22, 2012, as reports of the materially lowered revenue estimates filtered out to the public through Reuters and other media outlets, the price of Facebook shares declined to close at only $31 per share.  The complaints further allege that had Plaintiffs and the members of the Class known the facts not disclosed in the Offering Documents, they would  not have purchased their Facebook shares or would have purchased them only at substantially reduced prices.