Facebook IPO lawsuits to be heard in New York

Dozens of lawsuits against Facebook Inc, the NASDAQ exchange and various underwriters will be centralized before a federal judge in New York, who must sort through the legal aftermath of Facebook's botched initial public offering, the Reuters reported.

A panel of federal judges on Thursday ordered that cases filed around the United States be transferred to U.S. District Judge Robert Sweet in Manhattan. Facebook had requested the transfer, while some investors sought to keep their cases in California.

While some of the cases concern different defendants and claims, "they do involve enough common questions of fact, related circumstances and common discovery to warrant centralization," the panel said.
Facebook said in a statement that it was pleased with the ruling, and that it would "vigorously" defend itself. An attorney for some of the California plaintiffs declined to comment, while a NASDAQ representative did not immediately respond to a request for comment.

Investors say they lost money due to technical glitches on the Nasdaqstock market and accuse the company of selectively disclosing unflattering information about its business prospects to Wall Street analysts who then shared it with privileged investors.

The lawsuits, which are seeking unspecified damages, could cost Facebook millions of dollars to defend as it strives to put the IPO behind it.

Facebook's stock tumbled as much as 50 percent after its debut at $38 per share. It closed at $21.95 on Thursday.

In at least 33 lawsuits seeking class action status, investors have asked courts to hold the company and its underwriters responsible for causing their losses.
Facebook has said that it did not violate any rules and that NASDAQ was to blame for trading glitches on the day of the offering.

Grouping cases together keeps similar lawsuits from proceeding at the same time in different courts. Lawsuits against NASDAQ OMX Group Inc, which accuse the exchange of being negligent in failing to execute trades in the face of record-breaking volume during the IPO, will also be in front of Sweet.
But the exchange has already asked that their cases proceed on a separate track from the Facebook lawsuits. The case is In Re: Facebook Inc, IPO Securities and Derivative Litigation, U.S. Judicial Panel on Multidistrict Litigation, No. 12-md-2389.

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13 April 2024

12 04 2024