Enter your email address and start getting breaking law firm and legal news right now!
Lawyers Line Up to Sue Facebook over IPO
Lawsuits are being filed fast and numerous against both Facebook and Nasdaq operators and lawyers for plaintiffs seem glued to Facebook. They are plain lovin’ it! At issue are the selective disclosures prior to the IPO that botched the trading debut on the stock market and delayed the completion of many orders. Some laws and rules that may have been infringed in the episode may include Section 12 (a)(2) of the U.S. Securities Act of 1933, the provisions of The U.S. Securities and Exchange Commission’s Regulation Fair Disclosure, and of course the ever-present law of negligence.
In fact, the Nasdaq OMX Group Inc has already been sued by an investor who claims that the exchange operator was negligent in handling orders for Facebook shares. And that negligence caused losses to investors. Several lawsuits seeking class-action have already been filed, including by law firms. Just on May 23, at least six securities class action firms announced that they were thinking of filing lawsuits on behalf of Facebook shareholders.
The ball was opened by Robbins Geller Rudman & Dowd, which named Facebook, its executives and the underwriters of the IPO including Morgan Stanley, JPMorgan Chase, Goldman Sachs and others as the defendants. The primary charges are that the defendants misled investors about the actual financial situation and caused losses of billions of dollars.
Los Angeles-based Glancy Binkow & Goldberg has also filed a securities class action in San Mateo County, California over the Facebook IPO. Not to be left behind, Criden & Love of Miami sued Nasdaq’s OMX Group for negligence.
Relevant provisions of the U.S. Securities Act of 1933 hold any person who offers or sells a security liable, if there is an untrue statement of a material fact or if there is an omission of an essential material fact. The Reg FD of the U.S. SEC also prohibits selective disclosure of price-sensitive information, though it is not generally applicable to IPOs. However, there are high probabilities of a win in favor of those alleging negligence and breach of provisions of the U.S. Securities Act.
All in all, it’s a bonanza for lawyers.