Facebook Inc Chief Executive Mark Zuckerberg and other executives won
the dismissal Wednesday of four shareholder lawsuits following the
social networking company's $16 billion initial public offering last
U.S. District Judge Robert Sweet in Manhattan concluded that the
individual investors who brought the cases could not establish standing
to sue because they were not Facebook shareholders at the time the
alleged wrongdoing took place.
Facebook still faces many other
claims from various plaintiffs over its IPO last May. The cases largely
center on allegations that Facebook executives failed to make adequate
disclosures ahead of the IPO about weakened revenue growth projections
resulting from greater use of the company's website through mobile
Fifty-three lawsuits have been consolidated before Sweet
stemming from the IPO. The lawsuits are a continuing headache for
Facebook and a reminder of the glitches that tarnished one of the most
hotly anticipated new stock offerings in recent memory.
While dismissing the four cases Wednesday, the judge gave the plaintiffs the option to revise the lawsuits and refile them.
in a finding that could be significant for other Facebook lawsuits, the
judge said that while the plaintiffs claimed the defendants knew they
hid facts from the marketplace, the company had "repeatedly made express
and extensive warnings" about the increased use of mobile applications.
spokesman Andrew Noyes said the company was pleased with the ruling.
Lawyers for the plaintiffs had no immediate comment.
Sweet said the plaintiffs could file new versions of the cases against Facebook officers and directors within 20 days.
cases are classified as so-called "derivative" cases filed by
investors on behalf of the corporation rather than proposed class
actions against the company on behalf of a group of shareholders.
Sweet ruled that a proposed class action against NASDAQ OMX Group Inc
over the IPO should stay in his court. The plaintiff had wanted the case
to be returned to the New York State Supreme Court, where it was
Nasdaq has been accused in various investor
lawsuits of not properly executing orders to buy and sell Facebook
shares on the first day of trading. A lawyer for the plaintiff and a
Nasdaq spokesman were not immediately available for comment.
case is In re Facebook, Inc, IPO Securities and Derivative Litigation,
U.S. District Court, Southern District of New York, MDL No. 12-2389.
© Thomson Reuters 2013