As Facebook's stock fell just days after trading, three investors filed suit against the company today, along with underwriters Morgan Stanley and Goldman Sachs, accusing them of withholding damaging information about the social network's IPO. Wednesday's suit, according to the Wall Street Journal, claims "the changes made to Facebook's offering document, which said that mobile-user growth could slow revenue growth, didn't accurately portray the impact on Facebook's revenue growth." This information, it seems, was "selectively disclosed" in an effort to boost the IPO price while harming public stockholders. And now that said stock is tanking? Investors are livid.
A Morgan Stanley spokesman defended the company's analysis, saying they "followed the same procedures for the Facebook offering that it follows for all IPOs" and that "[t]hese procedures are in compliance with all applicable regulations." Facebook took a stronger stance on the lawsuit, telling CNN, "We believe the lawsuit is without merit and will defend ourselves vigorously."
An angry Adrien Chen of Gawker slams the entire deal and its surrounding brouhaha as "web 2.0 populism," going on to say: "[T]he details behind the deal also also make it clear that ordinary people will never meaningfully share in Facebook's vast success, no matter where the needle on the Wall Street Journal's awful Mark Zuckerberg Wealth-Tracking Widget finally lands." Furthermore, according to POLITICO, the Senate Banking Committee now plans to "learn more about issues raised in the news regarding Facebook’s IPO by conducting staff briefings with Facebook, regulators and other stakeholders."
Meanwhile, on its fourth day of trading, Facebook stock is up an entire dollar!