Investors sue Facebook, Morgan Stanley

[brooklynite]

Last edited Wed May 23, 2012, 01:06 PM - Edit history (1)

Source: CNN

NEW YORK (CNNMoney) -- Three investors sued Facebook and chief executive Mark Zuckerberg on Wednesday, along with lead underwriter Morgan Stanley and a host of other underwriters, accusing them of withholding negative information about the social network's initial public offering.

"It appears as though material information was not disclosed," said Robert Weiser, one of the plaintiff lawyers in the class action suit. "We believe that the offering was conducted unfairly and it harmed public stockholders."

The suit was filed in the U.S. District Court for the Southern District of New York in Manhattan.

According to a report published by Reuters, Morgan Stanley (MS, Fortune 500) shared a negative assessment of the social network with major clients ahead of Facebook's (FB) IPO, which debuted last week.

Read more: http://money.cnn.com/2012/05/23/technology/facebook-lawsuit/index.htm?hpt=hp_t1

---

...which is probably going to knock down the share price.

[Myrina]

1. Haha, that's hilarious - Facebook concealing information instead of sharing it ??

[spiderpig]

2. Oh, this is getting good

[drm604]

3. This is getting very interesting.

[JackRiddler]

4. Target: $9

Too bad it's not Zuckerberg taking the hit, but at least the underwriters will be screwed.

[Fearless]

5. Well he's 60% shareholder...

So while to us its a billion this way or that... he surely feels like he's taking a hit.

Although I would state that this has all been planned. They looked to get as much cash off stock buyers in the IPO as possible. They did. And now the stock price will dip to where it should have been in the first place.

[malthaussen]

6. Be interesting to see how much of the swag he walks away with.

I wonder if, now that he's unloaded, he'll short it?

-- Mal

[Brother Buzz]

16. Zuckerberg cashed in $1.13 BILLION

Sold off 30.2 million shares at $37.58 each

[EC]

7. Someone orchestrating

a hostile take over?

[cbdo2007]

8. The stock will probably rise above $50 over the next 3-6 months.....so then will they sue again for

losing the shares or getting money from suing this time?!!?!?!?

People just don't understand how the stock market works anymore. The Facebook "fiasco" is actually a GOOD thing because this is how the market should work. You don't always win. Stocks don't always go up. It should take a year or 2 to make 10%.....not one day.

[frylock]

9. c'mon man, you're ruining it for everyone that wants to hate on facebook and zuckerberg..

quit using logic in this obviously emotional issue.

[elleng]

11. Thanks

[elleng]

10. Thanks

[salib]

19. You are missing the point

This suit questions the use of information provided to a select group of investors. Much like "insider information." Hey, even Gordon Gecko knew he had to hide that one.

It is also telling that you say "People just don't understand how the stock market works anymore." I guess insider trading is part of how the stock market works now?

[JackRiddler]

20. Entirely possible it will go even higher. So? What will it prove?

It's still a beachball at a college football game. Its altitude has nothing to do with underlying value. It will be one of those "it" stocks that people love for high volume and constant volatility. Among all the trader-addicts large and small, who doesn't hope to take a 10 percent ride every day? You may think it's the next Apple, but it looks more like all the bullshit dot-coms of a decade ago. An eminently replaceable social media platform that will peak in membership and has tiny earnings for the market value. If they add too many ads, people will start to leave. If people start to feel uneasy about how they're using all the data, it could avalanche. One minor Zuckerberg sex scandal could sink it overnight. Remember myspace, etc. etc. On the other hand, they now have enormous resources, so if they get lucky and buy just the right start-ups, they might end up having a real company out of this. But right now Facebook has all the potentials of AOL valued above the level of Time-Warner, if you remember.

And you're right, this is how the market "should" work, from the perspective of its makers: they pump, they dump, and they eat most of the little suckers on the way up and down. Everyone's fully distracted by a complete bullshit story (Facebook stands in for the health of capitalism, or America). Millions of idiots think they're going to stay ahead of high-volume super-fast traders in a rigged game. Until the inevitable next clean-out. This is what the market is. Since when do the banks and funds and underwriters who make the market believe in the bullshit you're saying about "it should take a year or 2 to make 10%." To them, anyone who thinks that way is a loser. Insufficiently sociopathic. A worthy target. Plunder them and laugh. It's the will of evolution. Insert Michael Douglas/Alec Baldwin speech. Etc. etc.

[yellowcanine]

22. There are legitimate questions though. Like why was the IPO price changed at the last minute?

It was originally supposed to be between $28 and $35. Then all of a sudden it is $38. That is big difference - an uncharitable view might be that this was a kind of bait and switch. People might have given their brokers orders to buy based on the advertised lower price but might have shied away if they had known the price was going to be higher. There is also the question of new financial information which was provided to the big banks but not to potential investors, at least not in as timely a fashion. And then there was the foulup at Nasdaq in processing orders. So there are questions which should be answered. Any one of these irregularities could have a completely innocent explanation; the fact that all three occurred gives one pause, however.

[Incitatus]

12. It was valued at about 100 times earnings and they don't produce anything

what else did they need to know?

[Poll_Blind]

13. ^ This

Really.

PB

[florida08]

14. ruh roh

This is different from being sued by wealthy college students but the names are familiar.

Other underwriters targeted by the lawsuit include Barclays Capital, Goldman Sachs, JPMorgan Chase and Merrill Lynch, a unit of Bank of America.

Read more: http://www.kitv.com/news/money/Shareholders-sue-Facebook-banks-over-IPO/-/8905154/13659882/-/o7q5w9/-/index.html#ixzz1viN830zx

[marions ghost]

15. funny

not feelin' your pain, investors.

I'm no whiz --re. the stock market --but my first instinct on reading this was

[Bozita]

17. I couldn't resist ...

[Poll_Blind]

18. Ha!

PB

[yellowcanine]

21. Something is rotten in Denmark.......

It is beginning to look like insider trading may have played a role in the Facebook IPO fiasco.