Judge Throws Out Key Suit on Botched Facebook IPO
On Wednesday, a judge in the Southern District of New York dismissed a key group of plaintiffs in litigation against Facebook for allegedly mishandling its 2012 initial public offering.
The case dismissed the so-called "derivatives" group of investor lawsuits, which claimed Facebook's management and directors — including CEO Mark Zuckerberg — should have been held liable for their alleged mishandling of the deal.
At issue, plaintiffs claimed that Facebook was selective in disclosing negative metrics about the business, and that its directors improperly sold shares in the deal.
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In his ruling, Judge Sweet concluded that Facebook and its directors did make extensive warnings in its various offering documents, and that courts have unanimously agreed that internal projections are not material.
The Judge said the court is following the lead of the Securities and Exchange Commission, and noted it's not required for this forward-looking information to be included in a company's filing.
A Facebook spokesperson said, "We are pleased with the court's ruling."
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The decision could bode well for the company as it continues to battle a second group of IPO plaintiffs, which are suing the company. That group, collectively known as the "securities" plaintiffs, is due to issue new complaint documents at the end of this month.
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