U.S. District Judge Robert Sweet ruled that Facebook, Co-Founder and CEO Mark Zuckerberg, and several banks must face a lawsuit by investors over the social network’s bungled May 2012 initial public offering, Reuters reported.
Sweet also ruled earlier this week that those same investors could pursue claims against Nasdaq parent Nasdaq OMX Group due to the exchange’s concealing of technology issues that led to the problems processing trades on Facebook’s first day of trading, May 18, 2012.
According to Reuters, the plaintiffs claimed that Facebook should have disclosed its internal projections about the effects of mobile usage and product decisions on its potential future revenues to all investors, while the defendants argued that the company was under no obligation to make those “immaterial” disclosure.
Sweet, however, did not see the information as immaterial, according to Reuters, ruling that higher mobile usage has already had a “material negative” impact on revenue, and writing:
The company’s purported risk warnings misleadingly represented that this revenue cut was merely possible when, in fact, it had already materialized. Plaintiffs have sufficiently pleaded material misrepresentation(s) that could have and did mislead investors regarding the company’s future and current revenues.
Readers: How do you see this case ending up?
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