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Facebook convinces judge to dismiss 4 IPO related lawsuits

Facebook convinces judge to dismiss 4 IPO-related lawsuits

By Reuters | Updated: 14 February 2013 16:07 IST

Facebook Inc Chief Executive Mark Zuckerberg and other executives won the dismissal Wednesday of four shareholder lawsuits following the social networking company's $16 billion initial public offering last year.

U.S. District Judge Robert Sweet in Manhattan concluded that the individual investors who brought the cases could not establish standing to sue because they were not Facebook shareholders at the time the alleged wrongdoing took place.

Facebook still faces many other claims from various plaintiffs over its IPO last May. The cases largely center on allegations that Facebook executives failed to make adequate disclosures ahead of the IPO about weakened revenue growth projections resulting from greater use of the company's website through mobile devices.

Fifty-three lawsuits have been consolidated before Sweet stemming from the IPO. The lawsuits are a continuing headache for Facebook and a reminder of the glitches that tarnished one of the most hotly anticipated new stock offerings in recent memory.

While dismissing the four cases Wednesday, the judge gave the plaintiffs the option to revise the lawsuits and refile them.

But in a finding that could be significant for other Facebook lawsuits, the judge said that while the plaintiffs claimed the defendants knew they hid facts from the marketplace, the company had "repeatedly made express and extensive warnings" about the increased use of mobile applications.

Facebook spokesman Andrew Noyes said the company was pleased with the ruling. Lawyers for the plaintiffs had no immediate comment.

Sweet said the plaintiffs could file new versions of the cases against Facebook officers and directors within 20 days.

The cases are classified as so-called "derivative" cases filed by investors on behalf of the corporation rather than proposed class actions against the company on behalf of a group of shareholders.

Separately, Sweet ruled that a proposed class action against NASDAQ OMX Group Inc over the IPO should stay in his court. The plaintiff had wanted the case to be returned to the New York State Supreme Court, where it was initially filed.

Nasdaq has been accused in various investor lawsuits of not properly executing orders to buy and sell Facebook shares on the first day of trading. A lawyer for the plaintiff and a Nasdaq spokesman were not immediately available for comment.

The 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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