Shareholders sue Facebook ,NYSE calls for listing

by Paul Wilson | Wednesday, May 23, 2012 | 619 views

The fallout following the mess over the Facebook IPO in fresh developments saw the social networking firm being sued by the shareholders as well as the bankers ,as another trading firm has been found to threaten it seeking remedies after revealing massive losses following the IPO.

Also what gathered strength today, was NYSE Euronext’s moves to have a potential stock listing of Facebook on it. Nasdaq after the technical glitches it faced is under litigation charges by angry investors and is increasing pressure. The listing of Facebook which was being seen as a historical moment and a business phenomenon bringing a crowning moment for its underwriter Morgan Stanley , has instead become a public relations and legal fiasco for the eight year old banking firm.

Massive trading glitches in the Nasdaq stock exchange on the debut morning of the stock’s listing heavily interfered with the trading. Also what has come out in fresh revelations , that analyst who had reduced the forecast of revenue for the stock had selectively divulged the information to certain investors. The last closing price for Facebook was $32 , which is 15 % below the price of the IPO.

A lawsuit was filed trying to seek class-action status against Facebook , its CEO Mark Zuckerberg , Goldman Sachs Group , JPMorgan and Chase and Morgan Stanley for concealing a pronounced reduction in its forecasts of revenue growth as a result of increased use of Facebook’s website and applications on mobile devices.

Facebook has also been accused of asking the underwriters for lowering the forecasts and was disclosed to preferred investors. This was done in the middle of roadshow without telling all the investors . The information should have been disclosed to all the shareholders . Facebook in its statement called the lawsuit being without merit and has said that it will defend the charges against it vigorously. Knight capital Group said that its second quarter results are likely to hurt because of the issues coming out of the listing. Pre-tax losses of around $35 million are being estimated around the IPO. They submitted their compensation and financial claims against Nasdaq OMX and will sort to all legal remedies available.

This could very well be a sign of what will follow for Facebook , as investors and traders are coming round to sue the firm for trading losses. Nasdaq has been sued over negligence in handling of shares relating to the shares of Facebook. Morgan Stanley , who has been reviewing the trades , said that it would adjust the pricing for retail customers who had been made to overpay.

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