Judge dismisses 4 IPO-related lawsuits against Facebook

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By Brittany Darwell Comment

legalA U.S. district judge today dismissed four cases brought against Facebook by shareholders claiming the company failed to disclose material information ahead of its initial public offering in May 2012, according to Reuters.

U.S. District Judge Robert Sweet in Manhattan said the investors did not have grounds to sue because they were not Facebook shareholders at the time the alleged wrongdoing occurred. However, a number of other claims are still being brought against the social network, and the plaintiffs could file new “derivative” versions of their cases within 20 days.

Plaintiffs claim Facebook hid facts from investors and potential investors about how its growth projections would suffer from increased mobile usage. However, Judge Sweet said the company had indeed “repeatedly made express and extensive warnings” about mobile usage trends and potential effects on revenue growth.

In a separate ruling, Sweet decided that a proposed class action against NASDAQ OMX Group for damages related to Facebook’s IPO should stay in his court. The plaintiff had wanted the case to be returned to the New York State Supreme Court. Investors say they suffered losses because of glitches in NASDAQ’s system on the first day of Facebook trading.

That case is In re Facebook, Inc, IPO Securities and Derivative Litigation, U.S. District Court, Southern District of New York, MDL No. 12-2389.

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