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UPDATE 1-Investors sue Nasdaq, Facebook over IPO

Tue May 22, 2012 8:43pm EDT

* Nasdaq was negligent in handling Facebook orders, claims investor

* Nasdaq CEO says mistakes were made in Facebook listing

* Facebook's registration, prospectus materially false-2nd investor

* Facebook's shares down more than 18 percent vs IPO price

May 22 (Reuters) - Nasdaq OMX Group Inc has been sued by an investor who claimed the exchange operator was negligent in handling orders for Facebook Inc shares following its initial public offering, causing losses for investors.

In addition, a different civil lawsuit was filed against Facebook, Mark Zuckerberg, IPO underwriters Morgan Stanley & Co and others alleging violations of securities laws.

Phillip Goldberg, a Maryland resident, is seeking class-action status on behalf of all investors who lost money because Nasdaq delayed or otherwise mishandled their buy, sell or cancellation orders for Facebook stock on May 18, the day the social networking company went public.

A technical glitch delayed Facebook's market debut by roughly half an hour, and later delayed order confirmations.

Nasdaq Chief Executive Robert Greifeld told investors at his company's annual meeting on Tuesday that "clearly we had mistakes in the Facebook listing," but more than 570 million shares were processed on the first day.

Goldberg filed his lawsuit on Tuesday in the U.S. District Court in Manhattan.

SHARES SLIDE

Separately, investor Darryl Lazar filed a proposed class-action lawsuit in a California state court, alleging that Facebook's registration and prospectus were materially false, according to a statement from plaintiff law firm Glancy Binkow & Goldberg.

Reuters reported late on Monday that the consumer Internet analyst at lead underwriter Morgan Stanley cut his revenue forecasts for Facebook in the days before the offering, information that may not have reached many investors before the stock was listed.

Representatives from Facebook and Morgan Stanley could not immediately be reached for comment on the securities class-action.

Facebook shares sank on Monday and Tuesday -- their second and third days of trading -- to end at $31, more than 18 percent below the initial public offering price of $38.

The Nasdaq case is Goldberg v. Nasdaq OMX Group Inc et al, U.S. District Court, Southern District of New York, No. 12-04054.
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Comments (3)
foreword1 wrote:
The investors should sue themselves for being brainless. Facebook? Maybe they can get paid in “likes”

May 22, 2012 8:58pm EDT  --  Report as abuse
RFX wrote:
Wow, FB lawsuits THIS quick? You Americans have lawsuits down to a science. People warned you that the FB IPO was over-valued, you didn’t listen… but it’s like a National Sport that if you make a stupid investment or do anything else foolish, you “sue everybody”. No wonder the whole nation is stagnating with an anti-personal-responsibility populace like this… Perhaps a minority of Americans take responsibility for other choices, like who you elect, but approx 96% of you also vote for either Repubs or Dems–and then congressional approval-ratings ranged from 15% to 35% for the past TWO DECADES, meaning that 81% to 61% of you couldn’t take responsibility for the congressmen of these 2 parties that nearly all (96%) of you KEEP voting for, you hate your politicians & blame them, but it is you & your neighbors who need to take the blame (PERSONAL RESPONSIBILITY) for RE-ELECTING the same goofs & cronyists of BOTH parties to congress every 2 or 6 years… ;)

May 22, 2012 9:16pm EDT  --  Report as abuse
Scottilla wrote:
It’s not just the IPO subscribers who were cheated. I put in a bid at 11:30, after trading started, at a high limit price, and nothing happened. Then I revised my price after the price dropped and I still didn’t have the stock. The cancellation of the original order didn’t take, and when the purchase went through, it was at a much higher price than the stock ever traded after the cancellation.

May 23, 2012 9:11am EDT  --  Report as abuse
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