Facebook IPO Leads to Steep Investor Losses

by Wall Street Fraud on June 1, 2012

Investment fraud lawsuitMany investors that purchased pre-IPO shares of Facebook are experiencing steep losses after the stock dropped sharply on the open market. Now, Facebook and lead underwriter Morgan Stanley are facing investor lawsuits by shareholders who allege the two companies concealed lowered growth forecasts prior to the initial public offering.

According to Reuters, a lawsuit filed in New York maintains that the defendants, including Facebook Chief Executive Mark Zuckerberg, Goldman Sachs Group Inc. and JPMorgan Chase & Co., concealed "a severe and pronounced reduction" in revenue growth forecasts due to increased use of Facebook's mobile applications. Investors have also accused Facebook of telling its bank underwriters to "materially lower" their forecasts for the company. The lawsuit said the underwriters disclosed the lowered forecasts to "preferred" investors only.

"If Facebook told analysts to materially lower their forecasts, it should have told the entire market," said Antony Page, a professor at the Indiana University Robert H. McKinney School of Law. "We need to know what exactly was said to the analysts, and determine how different Facebook's public story was from its private story."

The U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, and state regulators are also investigating the IPO.

If you have been the victim of stock fraud, we may be able to help you recover your losses. Contact us today at 215-839-3953 for a free consultation.

At Wall Street Fraud, we are dedicated to offering assistance to those who have been hurt by improper corporate or investment practices.

If you have been the victim of stock brokerage fraud, securities fraud, mutual fund fraud, stockbroker fraud, annuities fraud, or any other type of investment fraud or negligence, please contact our securities fraud attorneys today for a free case evaluation. Our talented and aggressive legal and professional staff is eager to help you recover your losses.

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