Investors sue Nasdaq, Facebook over IPO

Wed May 23, 2012 10:00am IST

Commuters walk past the NASDAQ MarketSite in New York's Times Square May 22, 2012. REUTERS/Keith Bedford

Commuters walk past the NASDAQ MarketSite in New York's Times Square May 22, 2012.

Credit: Reuters/Keith Bedford

Stocks

   

REUTERS - Nasdaq OMX Group Inc has been sued by an investor who claimed the exchange operator was negligent in handling orders for Facebook Inc shares following its initial public offering, causing losses for investors.

In addition, a different civil lawsuit was filed against Facebook, Mark Zuckerberg, IPO underwriters Morgan Stanley & Co and others alleging violations of securities laws.

Phillip Goldberg, a Maryland resident, is seeking class-action status on behalf of all investors who lost money because Nasdaq delayed or otherwise mishandled their buy, sell or cancellation orders for Facebook stock on May 18, the day the social networking company went public.

A technical glitch delayed Facebook's market debut by roughly half an hour, and later delayed order confirmations.

Nasdaq Chief Executive Robert Greifeld told investors at his company's annual meeting on Tuesday that "clearly we had mistakes in the Facebook listing," but more than 570 million shares were processed on the first day.

Goldberg filed his lawsuit on Tuesday in the U.S. District Court in Manhattan.

SHARES SLIDE

Separately, investor Darryl Lazar filed a proposed class-action lawsuit in a California state court, alleging that Facebook's registration and prospectus were materially false, according to a statement from plaintiff law firm Glancy Binkow & Goldberg.

Reuters reported late on Monday that the consumer Internet analyst at lead underwriter Morgan Stanley cut his revenue forecasts for Facebook in the days before the offering, information that may not have reached many investors before the stock was listed.

Representatives from Facebook and Morgan Stanley could not immediately be reached for comment on the securities class-action.

Facebook shares sank on Monday and Tuesday -- their second and third days of trading -- to end at $31, more than 18 percent below the initial public offering price of $38.

The Nasdaq case is Goldberg v. Nasdaq OMX Group Inc et al, U.S. District Court, Southern District of New York, No. 12-04054.

(Reporting By Jonathan Stempel in New York; Editing by Gary Hill and Muralikumar Anantharaman)

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Comments (2)
johndoes wrote:
investor beware

May 22, 2012 6:44am IST  --  Report as abuse
johndoes wrote:
If these investors gained 18% as oppose to losing 18%, would they sue?
Investors who are suing, perhaps your shares will increase Thursday… But why wait, sue now…

May 22, 2012 6:51am IST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

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