IPO Lawsuits Merged In Win For Facebook

   on October 04 2012 8:45 PM
Commuters pass by Nasdaq headquarters in New York.
People walk by Nasdaq headquarters in New York. REUTERS

 

 

 

 

Dozens of lawsuits over Facebook's IPO fiasco against Facebook, Nasdaq and various underwriters will be centralized before a federal judge in New York, a panel of federal judges ordered Thursday.

The cases will be transferred to U.S. District Judge Robert Sweet in Manhattan. Facebook had requested the transfer, while some investors sought to keep their cases in California, Reuters reported.

While some of the cases concern different defendants and claims, "they do involve enough common questions of fact, related circumstances and common discovery to warrant centralization," the panel said.

Facebook said in a statement that it was pleased with the ruling, and that it would "vigorously" defend itself. An attorney for some of the California plaintiffs declined to comment, while a Nasdaq representative did not immediately respond to a request for comment.

Investors say they lost money due to technical glitches on the Nasdaq market and accuse Facebook of selectively disclosing unflattering information about its business prospects to Wall Street analysts who then shared it with privileged investors.

The lawsuits, which are seeking unspecified damages, could cost Facebook millions of dollars to defend as it strives to put the IPO behind it.

In at least 33 lawsuits seeking class action status, investors have asked courts to hold the company and its underwriters responsible for causing their losses.

Facebook has said that it did not violate any rules and that Nasdaq was to blame for trading glitches on the day of the offering.

The case is In Re: Facebook Inc, IPO Securities and Derivative Litigation, U.S. Judicial Panel on Multidistrict Litigation, No. 12-md-2389.

Meanwhile, the IPO market is recovering at last from the Facebook debacle.

Next week, nine initial public offerings are slated to start trading, making it potentially the busiest week for deals all year, Greg Leffert, analyst at Renaissance Capital, told USA Today. And that's coming off the busiest week for IPOs in more than two months. There have been 104 IPOs this year, which is running 3 percent ahead of last year.

"The market has come alive with the sound of IPOs," says John Fitzgibbon of IPOScoop.com

That development is a relief to market watchers, who saw the market shrivel up after the hyped and ultimately disappointing IPO in May of the largest social-networking company.

Not a single company had a successful IPO for 35 days following the Facebook offering, Leffert says.

 

Join the Discussion