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Facebook to face class actions over IPO

Wednesday, December 30, 2015 - 01:16

A federal judge has certified two shareholder class actions accusing Facebook Inc of hiding concerns about its growth forecasts prior to the social media company's May 2012 initial public offering. David Pollard reports.

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A thumbs up - but not for Facebook itself this time. Instead, from a US Federal judge - who says lawsuits against the social media giant relating to its IPO can go ahead as class actions. Facebook made its market debut in May 2012 as a 16 billion dollar offering. It's claimed that some retail and institutional investors lost money after buying shares at inflated prices. Facebook, they say, concealed information over how the growth in mobile devices - an area where it generated little revenue - might hurt prospects. After starting at 38 dollars, shares dropped to less than half that within four months. Though have since climbed to over 107 dollars a share. Little for Facebook to worry about then, says Admiral Markets Darren Sinden. (SOUNDBITE) (English): ADMIRAL MARKETS, MARKET ANALYST, DARREN SINDEN, SAYING "In the grand scheme of things they have got bigger challenges to face. They are trying to bring hundreds of millions of people into their services in places like India, that's more of a day to day business operation for them rather than what happened in the IPO - not wishing to dismiss the case of course as the details have to come out in open court." Defendants include Chief Executive Mark Zuckerberg, Chief Operating Officer Sheryl Sandberg and other officials. Facebook is appealing against the decision as "without merit".

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Facebook to face class actions over IPO

Wednesday, December 30, 2015 - 01:16