Zuckerberg Must Face the Ghost of Facebook Past

  • Like on Facebook
  • Share on Google+
  • Share on LinkedIn

Source: http://www.flickr.com/photos/spencereholtaway/

Shares of Facebook (NASDAQ:FB) fell as much as 2 percent in afternoon trading on Thursday after news broke that a U.S. district judge will allow investors to pursue claims the company misled investors before its initial public offering in May 2012.

In Manhattan, Judge Robert Sweet ruled that Facebook erred when it stated in its S-1 prospectus that increased mobile use “may negatively affect our revenue and financial results.” At the time, Facebook was not displaying mobile ads, and whether or not the company would crack the mobile monetization code was a hotly debated subject.

“The company’s purported risk warnings misleadingly represented that this revenue cut was merely possible when, in fact, it had already materialized,” wrote Sweet in a decision seen by Reuters. “Plaintiffs have sufficiently pleaded material misrepresentation that could have and did mislead investors regarding the company’s future and current revenues.”

The lawsuit alleges that Facebook and as many as 40 defendants at the company such as CEO Mark Zuckerberg, COO Sheryl Sandberg, and the underwriters of the IPO were negligent in their handling of the event.

More Articles About:

To contact the reporter on this story: staff.writers@wallstcheatsheet.com To contact the editor responsible for this story: editors@wallstcheatsheet.com

Yahoo Finance, Harvard Business Review, Market Watch, The Wall St. Journal, Financial Times, CNN Money, Fox Business