* Defendants say pre-IPO disclosures sufficient
* Facebook shares remain below IPO price
* Plaintiffs' lawyer sees no basis to dismiss case
May 1 Facebook Inc, its Chief Executive
Mark Zuckerberg and dozens of banks asked a federal judge to
throw out a lawsuit accusing the social media company of
misleading investors about its financial condition before its
$16 billion initial public offering a year ago.
The defendants said in court papers on Wednesday that before
the IPO last May 18, Facebook had no obligation to publicly
disclose internal projections on how increased mobile usage and
product decisions might affect future revenue, even if it had
provided the projections to its underwriters' analysts.
They said the U.S. Securities and Exchange Commission has
"consistently" refused to require issuers to publicly disclose
all "material nonpublic information" that they share with
analysts before an IPO, because of its potential negative impact
on a company's ability to raise money.
"Plaintiffs would have this court impose - retroactively - a
rule which the SEC has for decades thoughtfully rejected," the
defendants said in papers filed in U.S. District Court in
Manhattan. "This court should decline the invitation."
Among the defendants is Morgan Stanley, the lead
underwriter of the IPO.
"There is no reasonable basis for dismissal," Max Berger, a
partner at Bernstein Litowitz Berger & Grossmann representing
pension fund and other investors that are collectively the lead
plaintiffs, said in an email. "We will oppose the motion in due
The case before U.S. District Judge Robert Sweet
consolidates 31 lawsuits over Facebook's IPO.
Sweet also oversees separate investor litigation against
Nasdaq OMX Group Inc over allegations that orders to
buy and sell Facebook shares were executed improperly on the
first day of trading.
Facebook, based in Menlo Park, California, went public at
$38 per share. Its share price rose as high as $45 on the first
day, but quickly fell and remain below their offering price.
In Wednesday morning trading, Facebook shares were down 31
cents, or 1.1 percent, at $27.45 on the Nasdaq. Facebook is
scheduled to report quarterly results after U.S. markets close
The case is In re Facebook Inc IPO Securities and Derivative
Litigation, U.S. District Court, Southern District of New York,