Facebook Shareholders Cry Scam, Sue Mark Zuckerberg
Shareholders are feeling a little scammed and filed a suit against Zuckerberg, Facebook itself, and a number of Morgan Stanley-led banks, arguing that all three kept secret a “a severe and pronounced reduction” in the site’s revenue growth forecasts during the IPO process, reports Reuters. Business Insider adds that shareholders are being represented by Robbins Geller, the firm that won $7 billion from Enron.
The reduction is tied to an increase in tough-to-monetize mobile users; because that wasn’t mentioned in Facebook’s prospectus, the suit alleges that the prospectus “contained untrue statements of material facts.”
“The value of Facebook common stock has declined substantially and plaintiffs and the class have sustained damages as a result,” the complaint said.
Facebook shareholders complaints began after shares fell 18.4 percent from their $38 IPO price in the first three days of trading, reducing the value of stock sold in the IPO by more than $2.9 billion.