SOCIAL NETWORK Facebook is facing another lawsuit over its initial public offering (IPO), with a shareholder claiming that CEO Mark Zuckerberg did not disclose weaker revenue forecasts.
Facebook's IPO last year was mired in controversy after the firm increased its initial valuation prior to the IPO and then Nasdaq failed to cope with share demand. Both Facebook and Nasdaq have been sued, but now Gaye Jones alleges that Zuckerberg and other Facebook executives knew of weaker revenue forecasts but chose not to disclose this vital bit of information timely.
For weeks Facebook's shares tumbled as it became obvious even to Wall Street investors that the firm's fanciful $100bn valuation could not be justified. The social network is also trying to figure out how to crack the mobile advertising market, as more of its users are accessing the website through their smartphones and tablets rather than a desktop web browser.
Jones' lawsuit seeks to force the defendants to pay back the profits they made by trading the stock at its IPO price, which the complaint claims was overvalued due to the lack of proper revenue forecast disclosure.
The lawsuit says, "The defendants were unjustly enriched because they realized enormous profits and financial benefits from the IPO, despite knowing that reduced revenue and earnings forecasts for the company had not been publicly disclosed to investors."
Facebook has faced four similar lawsuits, all of which were dismissed last month. Facebook said of this complaint, "We believe this lawsuit is without merit and will defend ourselves vigorously". µ
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