Facebook faces lawsuits as stock price drops

May 25, 2012 1:59 pm Published by Leave your thoughts

Mere days ago, excitement reigned as Facebook joined the Nasdaq stock exchange. However, this joy quickly turned toward frustration as another investor lawsuit was announced. With its almost immediate decline in share price, Facebook shareholders began alleging that underwriters did not share pertinent information about the business' finances and that investors were left out in the cold.

While Facebook may have been a mere startup in its early days, it has now grown to become one of the largest companies worldwide. However, in Phoenix, other start-ups in the midst of investor lawsuits may want to obtain the help of a small business attorney.

Multiple lawsuits abound against the social media provider Facebook, as plaintiffs filed suits in California and other states. Experts say that, at this time, it is difficult to tell whether the underwriters committed any violations of U.S. securities laws.

The vital issue to settle is whether Facebook officials released all available information about the company's financial developments to its investors. The lawsuit claims that the company shared its less-than-predicted results with only specific institutional investors and not with smaller retail investors. The plaintiffs in these lawsuits have lost a collective $2.5 billion since Facebook's IPO took hold.

''The true facts at the time of the IPO were that Facebook was then experiencing a severe and pronounced reduction in revenue growth due to an increase of users of its Facebook app or website through mobile devices rather than a traditional PC such that the company told the underwriter defendants to materially lower their revenue forecasts for 2012,'' according to one plaintiff's lawsuit.

Facebook's less-than-expected results have clearly turned into a growing problem for the company. SMBs may have less of an issue on their hands while solving problems with investors, but business owners seeking a legal action or defending a civil action may need the benefits of a lawyer for small business.

Categorised in: Uncategorized

This post was written by