Technology

Facebook Investors Filed A Lawsuit Against Zuckerberg

Sure, it’s not exactly breaking news that Mark Zuckerberg is being sued. However, this time Mark Zuckerberg is being slammed with some serious allegations. Facebook investors filed a lawsuit against Zuckerberg over insider trading allegations. It looks like Facebook is heading towards a rough patch.

The Facebook IPO was not the success everybody was hoping for. Zuckerberg did not seem to bother with the share’s price dropping hastily in trading. In fact, he tied the knot with his longtime girlfriend Priscilla Chan over the same weekend the Facebook IPO was launched. Now, angry investors that lost money in what was advertised as the most important IPO of the year have filed a lawsuit against Facebook’s founder.

TMZ reports that Mark Zuckerberg is being slammed with allegations of insider trading. The angry investors claim that Zuckerberg knew the price was going to drop but chose to inform only the most important shareholders. The lawsuit claims that Zuckerberg was aware the Facebook business model couldn’t have supported the estimated advertising revenue required to launch the IPO at 38 dollars per share.

Moreover, it looks like Facebook’s financial advisors, Morgan Stanley, J.P. Morgan Chase and Goldman Sachs were also aware of the risk. They informed Mark Zuckerberg that Facebook was overvalued. Apparently, the company’s founder decided to “selectively” disclose that information to Facebook largest investors, leaving the rest in the dark.

Since the May 18th Facebook IPO debut, the company’s share have dropped about 30%. With Zuckerberg sued for insider trading, Facebook seems to be heading into a rough patch. The failed Facebook IPO angered many investors. Even the companies that handled the IPO are at risk of lawsuits and investigations.

Rick Ketchum with the Financial Industry Regulatory Authority said that Morgan Stanley is currently investigated for selectively disclosing that Facebook was overvalued to only a few clients. He said it was “a matter of regulatory concern”. Morgan Stanley dismissed the allegations saying it “followed the same procedures for the Facebook offering that it follows for all IPOs”.

Only a few days after the Facebook IPO launch, Nasdaq OMZ Group was also hit with a lawsuit. Robert Greifeld, Nasdaq Chief Executive, confessed to investors that the company made “mistakes in the Facebook listing”.

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John Colston is currently the leader and coordinator of our team of writers. He lives in Colorado and is collaborating with Ironclad Integrity Unlimited Ltd since 2006.John is a passionate independent journalist with a lot of experience in team building and human resources management.If you have any questions, suggestions or editorial complaints about DailyGossip.org, contact John at John.Colston@dailygossip.org

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