Another Investor Sues Facebook over IPO

By

Just when Facebook thoughts its IPO-related legal woes were over, the company is seeing a revival of its problems thanks to a new lawsuit filed by a shareholder. The new lawsuit seeks to force CEO and founder Mark Zuckerberg, directors and other defendants to give up the money they made from selling stock through Facebook’s IPO. The suit alleges the defendants knew the stock was overpriced, and that they failed to disclose weaker revenue trends as more users accessed the website through mobile devices.

The plaintiff, Gaye Jones, is alleging in the lawsuit that information had been selectively shared with the company's IPO underwriters and key investors,  Reuters is reporting today.

While four similar lawsuits filed in New York courts were dismissed by a judge last month because the plaintiffs did not own Facebook stock prior to the IPO, Jones did, which may complicate Facebook’s legal position. A proposed class action is still being heard in federal court in Manhattan, as well.

The new lawsuit was filed in Delaware, where Facebook is incorporated. The IPO’s underwriters, units of JPMorgan Chase & Co, Morgan Stanley and Goldman Sachs Group Inc., are also named as defendants, according to Reuters.

Facebook said in a statement that "we believe this lawsuit is without merit and will defend ourselves vigorously."

On another legal front, last month, it was revealed that Nasdaq was in preliminary talks with the Securities and Exchange Commission (SEC) over a potential settlement related to its botched handling of Facebook's initial public offering (IPO), reported the Wall Street Journal. The two were said to be discussing a monetary penalty of about $5 million. The settlement would be the culmination of an eight-month SEC investigation into the problems with Facebook’s May 18, 2012 IPO.

The day of Facebook's IPO, Nasdaq's systems got caught in a loop while lining up orders before the social-networking company's shares started trading. The opening of trading in Facebook shares was stalled by half an hour. For almost three hours more, Nasdaq failed to send order confirmations to brokers, causing uncertainty about who held what positions, according to the WSJ.




Edited by Brooke Neuman
Get stories like this delivered straight to your inbox. [Free eNews Subscription]

TechZone360 Contributor

SHARE THIS ARTICLE
Related Articles

Why More Leads Won't Fix a Broken Lead Management Process

By: Contributing Writer    6/23/2026

When sales results start to stall, many organizations immediately look to the top of the funnel for answers. The assumption is simple: if revenue i…

Read More

Your Post-Quantum Readiness Starts at Y2Q Summit

By: TMCnet News    5/27/2026

Y2Q Summit is an executive conference focused on helping enterprises prepare for the coming era of quantum computing disruption, cybersecurity transfo…

Read More

Why Award Marketing Should Be Part of Every B2B Tech Company's Growth Strategy

By: Erik Linask    5/20/2026

Award marketing matters for B2B tech companies because industry recognition can strengthen trust, support sales and partner relationships, improve con…

Read More

Why Email Is Still the Most Underrated Layer of Modern Software Infrastructure

By: Contributing Writer    5/15/2026

Take, for example, the following scenario. A user requests a password reset, waits a few seconds, refreshes their inbox and nothing arrives. They try …

Read More

Jitterbit's Visionary Status Signals a Shift in the iPaaS Market

By: Contributing Writer    4/7/2026

As enterprise ecosystems grow more complex, integration has become less of a backend IT function and more of a strategic driver of business performanc…

Read More