Shareholders are reportedly showing their dislike for Facebookâ€™s IPO fiasco with a lawsuit. The social media giant, and Morgan Stanley, are being sued over claims Facebookâ€™s growth forecasts were hidden before it went public. click below to find out more.
â€œThe value of Facebook common stock has declined substantially and plaintiffs and the class have sustained damages as a result,” the complaint said, according to Reuters.
Goldman Sachs Group and JPMorgan Chase & Co. are also named in the lawsuit, along with units of Bank of America and Barclays, Bloomberg News reported.
â€œThe true facts at the time of the IPO were that Facebook was then experiencing a severe and pronounced reduction in revenue growth,â€ the lawsuit stated, according to Bloomberg News.
Facebook, its investment banks and Nasdaq have come under increasing scrutiny since the social networkâ€™s initial public offering fizzled on Friday.
Regulators are examining whether Morgan Stanley, the investment bank that shepherded Facebook through its highly publicized stock offering last week, selectively informed clients of an analystâ€™s negative report about the company before the stock started trading.
Massachusetts launched its own investigation and issued a subpoena to Morgan Stanley this week.
Facebookâ€™s stock added just 23 cents to its initial offering of $38 on the day it went public Friday. It fell below that on Monday, then slid to $31 by Tuesday.
The bank said late Tuesday that it â€œfollowed the same procedures for the Facebook offering that it follows for all IPOs,â€ referring to initial public offerings of stock. It said that its procedures complied with regulations.