Facebook Faces Shareholders Class-action Lawsuits Over IPO

(RTTNews) - Facebook Inc. (FB) will face two shareholder class-action lawsuits after a federal judge said shareholders could pursue their respective claims against the social network as group lawsuits.

U.S. District Judge Robert Sweet in Manhattan certified two shareholder class actions against Facebook. This will enable retail and institutional investors who claim to have lost money from buying Facebook shares at inflated prices in the IPO, to sue collectively. The judge's decision is dated December 11, but was made public on Tuesday.

The shareholders have accused Facebook of hiding concerns about its growth forecasts ahead of its $16 billion initial public offering.

Facebook made its market debut at $38 per share on May 18, 2012, but closed its first day of trading at $31 per share. The share price more than halved in September and remained below the IPO price for more than a year.

Shortly thereafter, numerous plaintiffs filed lawsuits throughout the country, raising claims about the adequacy of pre-IPO and Class Period disclosures under the federal securities laws.

The plaintiffs alleged that they suffered some loss as a result of these events, though the causes of action they asserted varied.

The defendants include Facebook's Chief Executive Officer Mark Zuckerberg, Chief Operating Officer Sheryl Sandberg, as well as other top officials.

Facebook, which has asked the federal appeals court in Manhattan for permission to appeal the class certifications, said it believed the class certification is without merit.