Facebook Inc. (FB) May Face IPO Lawsuits in Manhattan

Facebook Inc. (NASDAQ:FB) investors took it on the chin when they jumped in and bought stock before the company’s much-anticipated but disappointing IPO in May. And more than a handful of investors are not accepting the events of that IPO as just part of risk-taking – they are seeking class-action status to sue Facebook, the NASDAQ and underwriters of the IPO to try to recover losses they claim could have been prevented.

Facebook Inc. (FB)

There was a hearing Thursday before the Judicial Panel on Multidistrict Litigation in Manhattan, where both sides moved to ask that all of the lawsuits be handled in a New York courtroom – Facebook Inc. (NASDAQ:FB) is facing at least 33 lawsuits that have been filed in several states. The argument to have all of the cases held in New York is due to the ease of access to documents and witnesses germane to the IPO are housed in Manhattan. Virtually all of the attorneys representing the various parties spoke on the same side in favor of consolidating all of the cases in one jurisdiction.

The exception, however, came from a couple of derivatives lawsuits filed in California, in which these plaintiffs were suing the Facebook Inc. (NASDAQ:FB) board of directors and CEO Mark Zuckerberg for damages. Those lawsuits are looking to be tried in California, as Facebook is based there and many of the witnesses and evidence surrounding those cases are based on the Left Coast.

Most of the Facebook Inc. (NASDAQ:FB) cases are already in New York before Judge Robert Sweet. A final decision on the disposition of these cases is expected in several weeks. NASDAQ, which expressed affirmation about the cases being in New York, however stated that its lawsuits are not much in common with the Facebook lawsuits and thus should be handled separately.

In the multitude of these cases which seek class-action status, Facebook Inc. (NASDAQ:FB) and IPO underwriters are being claimed responsibility for the losses incurred in the IPO. Investors claim they lost money due to technical issues on the NASDAQ market and they say Facebook revealed negative information about its future to market analysts, who then shared the information with preferred investors.

While it will be a while before these cases actually get to trial, Facebook Inc. (NASDAQ:FB) will likely spend millions defending itself against these nearly three-dozen cases, which of course will affect its bottom line in the near-term. That means investors like hedge-fund manager George Soros of Soros Fund Management may need to take a very long position in order to see returns.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!