A U.S. District Court in New York dismissed a shareholder lawsuit that claimed Facebook executives including Mark Zuckerberg and COO Sheryl Sandberg didn’t disclose enough about risks to the company’s advertising business as consumers shifted to mobile devices. In a separate Facebook-related case against NASDAQ, the same judge denied a motion to move the case to a different court. It’s a win for Facebook, as the company wades through a mess of litigation following its rocky IPO. “We are pleased with the court’s ruling,” the company said in a statement. The company’s shares have never recovered to the initial $38 price that the company sold stock at on its May 18 debut. The IPO, which raised about $16 billion for the company and early shareholders, was the most anticipated one since Google in 2004. Because Facebook’s shares have fallen more than 25 percent since the IPO, some investors have inevitably been disappointed. In this case, they said that Facebook executives sold billions of dollars of stock in the IPO even as internal projections suggested that the company’s revenues would fall short of earlier estimates. But the judge Robert W. Sweet said that the plaintiffs William Cole, Hal Hubuschman and Linda Levy bought their shares on the day of the IPO, well after Facebook had made several amendments to its IPO filing. Those amendments including warnings about the unproven ability of the company to make money on mobile platforms. The plaintiffs also cited several reports in the media that Facebook had lowered guidance to analysts, who then selectively disclosed that information to investors. In his ruling, Sweet said that even if Facebook disclosed internal projections that might have been material to the IPO, the plaintiffs hadn’t proven that it would have “significantly altered the total mix of information in the marketplace.” He also said that the timing of Zuckerberg’s decision to sell stock during the IPO wasn’t suspicious either because many executives routinely sell stock during public offerings. Lawyers for Facebook’s executives also argued that the case didn’t belong in that court or in California court, but instead in Delaware where Facebook is incorporated. In a separate class-action lawsuit against NASDAQ for allegedly botching orders on the day of the IPO, Sweet denied a motion to remand, or move the case to another court. The plaintiff in that case, Michael Zack, wanted the case to be heard in New York’s State
Source: http://feedproxy.google.com/~r/Techcrunch/~3/87ei23GcSrU/
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