Facebook Inc (NASDAQ: FB) Investor Securities Class Action Lawsuit 05/23/2012

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Case Name: 
Facebook Shareholder Class Action Lawsuit 05/23/2012
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Proposed
Affected Securities
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
Class Period Begin: 
Class Period End: 
Court of Filing: 
U.S. District Court for the Southern District of New York
Deadline To File for Lead: 
Date Settled: 
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The settlement includes all persons and entities who purchased or otherwise acquired Class A common stock of Facebook Inc in or traceable to Facebook Inc’s May 17, 2012 initial public offering (“IPO”) during the period from May 17, 2012 through May 21, 2012.

February 26, 2018 - Parties filed a stipulation of settlement and the court preliminarily approved the settlement.

November 9, 2015 - The court approved the settlement with the NASDAQ defendants.

June 25, 2015 – The court preliminarily approved the settlement.

May 22, 2015 - Parties (lead plaintiffs and NASDAQ defendants) filed a stipulation of settlement.

February 13, 2015 - The court ordered the case be stayed pending the decision of the Court of Appeals. Upon issuance of the mandate from the Court of Appeals, the parties will confer further on how the case should proceed.

May 21, 2014 - The defendants filed a notice of appeal and notice of cross appeal.

May 9, 2014 - Another plaintiff filed a notice of appeal.

May 5, 2014 - The court granted the defendants' motion to dismiss.

April 28, 2014 - The plaintiff filed a notice of appeal.

April 22, 2014 - The court entered a judgment in favor of the defendants.

April 20, 2014 - A plaintiff filed a notice of voluntary dismissal as to all defendants.

December 12, 2013 - The court granted in part and denied in part the defendants' motion to dismiss.

July 2, 2013 - The defendants filed a motion to dismiss.

April 30, 2013 - The defendants filed a motion to dismiss and the lead plaintiffs filed an amended consolidated complaint.

February 28, 2013 - The lead plaintiffs filed a consolidated complaint.

December 6, 2012 - The lead plaintiffs and lead counsel were appointed.

October 4, 2012 - The court ordered all cases to be consolidated into one multi-district case.

May 25, 2012 - More investors filed additional complaints.

May 24, 2012 - Other investors filed additional complaints.

May 23, 2012 - Other investors filed complaints.

May 23, 2012 - An investor in Facebook Inc (NASDAQ: FB) filed a lawsuit in the U.S. District Court for the Southern District of New York against Facebook Inc over alleged violations of Federal Securities Laws in connection with the initial public offering on May 18, 2012.

The lawsuit was filed on behalf of all persons or entities who purchased the securities of Facebook Inc (NASDAQ: FB) pursuant and/or traceable to the Registration Statement and Prospectus issued in connection with Facebook's IPO (including investors who purchased shares through May 22, 2012). The plaintiff alleges, among others, that the offering materials provided to potential investors were negligently prepared and failed to disclose material information about Facebook Inc’s business, operations and prospects, in violation of federal securities laws.

Facebook Inc (NASDAQ: FB) went public on May 18, 2012 with an IPO share price of $38 but it popped to a high of $42.025 per share. Facebook Inc received net proceeds of approximately $6.7 billion and the selling stockholders received approximately $9 billion.

However, Facebook Inc (NASDAQ: FB) shares closed on Friday at $38.07 per share.

On May 22, 2012, reports said the three banks, Morgan Stanley, Goldman Sachs, and JPMorgan, who will split about $176 million for managing the social-networking company’s initial public offering, all downgraded their earnings forecasts for Facebook Inc while it was still conducting its pre-IPO roadshow. A revised version that was released during the IPO roadshow sometime last week revealed huge revenue losses for Facebook Inc and projected into late 2012. A former Merrill Lynch analyst said he's never heard of such thing happening before.

The plaintiff claims that Facebook Inc, certain of its executive officers and directors and the underwriters of the IPO allegedly failed to disclose that during the IPO roadshow, the lead underwriters, including Morgan Stanley & Co LLC, JP Morgan Securities LLC, and Goldman Sachs & Co, cut their earnings forecasts and that news of the estimate cut was passed on only to a handful of large investor clients, not to the public.

Two top U.S. financial regulators are reportedly reviewing the initial public offering of Facebook Inc.

The U.S. Securities and Exchange Commission Chairman Mary Schapiro reportedly said to reporters that they would be looking into problems surrounding the initial public offering. The chairman of the Financial Industry Regulatory Authority reportedly said that the allegations are very serious and will be reviewed.

Following the IPO of Facebook Inc the NASDAQ reportedly set aside money to compensate customers for issues with trading orders. Trading in Facebook Inc shares on Friday was delayed by 30 minutes and left many investors in the dark about the status of their orders for more than two hours. A NASDAQ Stock Market official reportedly told customers that it would have pulled the plug on Facebook's IPO had it known the full extent of the technical problems that plagued its systems.

On Monday, May 21, 2012 Facebook Inc (NASDAQ: FB) stocks fell to a close of $34.06 per share and dropped on Tuesday to a close of $31.00 per share.

One article said Facebook’s IPO is among the worst big U.S. IPO in 5 years.