According to the plaintiffs, Facebook’s IPO on Friday provided misleading documents regarding the investment, including several false statements and the omission of important facts outlining “severe reduction in revenue growth” that the company was facing at the time the shares were purchased.
While Facebook’s stock has grown by 3.3 percent following a two-day drop, the US$1.03 increase only puts the company’s stock up to US$32.03 – 16 percent less than Friday’s initial price of US$38.
As a result, the plaintiff argue they have experienced damages and are seeking compensation from the company.
Facebook CEO Mark Zuckerberg, meanwhile, has reportedly netted a profit of US$1.2 billion after selling off 30.2 million shares in last week’s IPO reports CNET.
The social network has made a public statement to say declare the civil lawsuit against its IPO transcation is without merit. Underwriter Morgan Stanley is yet to comment.