Facebook's sharehodlers sued the social networking network and banks including Morgan Stanley, for hidding hid Facebook's weakened growth forecasts ahead of its initial public offering.
According to the lawsuit filed in U.S. District Court in Manhattan on Wednesday, Facebook's sharehodlers accuse the defendants of concealing from investors during the IPO marketing process a reduction in revenue growth forecasts, resulting from increased use of its app or website through mobile devices. This resulted to a decline in the value of Facebook's common stock, resulting to and damages to plaintiffs, the lawsuit says.
Facebook went public last week. Its shares fell 18.4 percent from their $38 IPO price in the first three days of trading, reducing the value of stock sold in the IPO by more than $2.9 billion.