A federal judge in a New York district court has certified two classes of plaintiffs in a claim alleging Facebook mislead investors prior to its 2012 initial public offering.
Earlier in December, U.S. district judge Robert Sweet named the North Carolina Retirement Systems, Arkansas Teacher Retirement System and the Fresno County Employees’ Retirement Association among the lead plaintiffs representing a class of institutional investors.
Facebook is reportedly appealing the certification of the classes in appellate court.
In certifying two classes of plaintiffs, Judge Sweet is combining some 40 claims that Facebook withheld inside company information about how increased mobile usage would affect future revenues.
In an earlier document addressing claims by some of the pension funds, Sweet wrote that “the company's purported risk warnings misleadingly represented that this revenue cut was merely possible when, in fact, it had already materialized," according to reporting in Reuters.
Shares of Facebook’s $16 billion IPO were priced at $38. They fell to about $17.50 four months later, in September 2012, in part on fears that the company was struggling to monetize its mobile platform. The stock stayed below the price of the IPO for about a year.
The public pensions involved claim to have lost about $7 million from IPO investments.
Facebook representatives maintain that claims the company withheld information from institutional and retail investors are without merit.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
