Facebook Court Filing Defends Initial Public Offering
06/15/2012| 02:56pm US/Eastern
Recommend:
--Facebook asks that dozens of shareholder suits be consolidated in New York
--Facebook says it followed standard practice leading up to IPO
--Social-media website puts much of the blame for stock drop on Nasdaq market
Facebook Inc. (FB) and its bankers issued a formal response to allegations in the many lawsuits filed following the company's flawed initial public offering, as part of a motion seeking consolidation of the cases.
In a motion filed Thursday with the U.S. Judicial Panel on Multidistrict Litigation, Facebook asked that the dozens of suits filed in multiple states be centralized in New York.
Facebook went public last month, and initially priced its stock at $38 a share. The shares have since tumbled, trading at roughly $29 a share Friday.
The company, based in Menlo Park, Calif., cited dozens of suits filed as a result of the company's alleged nonpublic briefing to analysts about a revised financial outlook prior to its IPO; alleging that the Nasdaq Stock Market's errors caused Facebook investors to lose money; and alleging that Facebook's lead IPO underwriters including Morgan Stanley (MS) sold shares in the firm with undisclosed knowledge about the company's finances.
In the new legal filing, Facebook argued that discussing financial matters with analysts prior to an IPO is standard practice, and that it fully disclosed potential drawbacks in its business including a relative lack of progress in serving advertisements on mobile devices.
"Plaintiffs rely heavily on post-IPO articles as sources for their allegations, but they ignore that what Facebook and the underwriter defendants allegedly did both followed customary practices and did not violate any rules," the company said in the filing.
The legal move effectively kicks off another leg of Facebook's public defense of its business and its IPO following a mandated, post-IPO-filing quiet period.
Earlier in the week, the company released research with comScore Inc. (>> COMSCORE, Inc.) showing ads on the site can be more effective than had been widely assumed.
Wednesday, a federal judge in Texas dismissed a legal action brought by a Facebook investor seeking to depose executives at the company including CEO Mark Zuckerberg regarding the flawed IPO.
In its filing Thursday, Facebook put the blame for the troubled offering on Nasdaq OMX Group Inc.'s (>> NASDAQ OMX Group, Inc.) Nasdaq Stock Market.
One reason for consolidating the many suits in New York, Facebook argued, is to gain easier access to the Nasdaq personnel responsible for the "trading errors" caused by the exchange that helped push Facebook's share price lower in the wake of its IPO.
A Nasdaq spokesman declined to comment.
--Jacob Bunge contributed to this article.
Write to John Letzing at john.letzing@dowjones.com
Recommend :
