DATA GATHERING PROJECT Facebook is facing lawsuits over its botched initial public offering (IPO) on the NASDAQ stock exchange in New York.
Facebook's IPO descended into farce soon after its debut on NASDAQ, with the firm, exchange and underwriters all fingered by angry stockholders who faced considerable losses on the highest profile IPO in years. Now a panel of US federal court judges has ruled that Facebook, NASDAQ and several underwriters must face dozens of lawsuits in front of a federal judge in New York.
US District Judge Robert Sweet will hear dozens of lawsuits that were initially filed in various courts all over the US. Facebook had requested that all the cases be heard in New York while some investors had asked to pursue their cases in California. Facebook said it will "vigorously" defend itself against the lawsuits.
A number of institutional investors such as the Swiss bank UBS lost significant sums of money as NASDAQ's systems failed to cope with demand, leading to multiple orders being entered as confirmations were not being received. Facebook's chief underwriter, JP Morgan, spent millions to keep its client's stock at the $38 opening price during the first day of trading, but eventually the stock fell by over 50 percent as investors realised the true value of the company.
Facebook laid the blame for the botched IPO at the feet of NASDAQ. While the lawsuits against NASDAQ will also be heard by Judge Sweet, the stock exchange has requested that its cases proceed on a different track from those against Facebook. µ
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