Facebook: lawsuit for misleading financial forecasts

Last week Facebook made its triumphant stock market debut but for Mark Zuckerberg and those who brokered the necessary financial operations, troubles already seem to be looming.
The disappointing performance of the stock on the market has indeed led some investors to revisit the terms reported in the documents accompanying the IPO, leading to a lawsuit taking the form of a class action.
In particular, the accusation is pointed at the fact that, before the stock market entry, misleading financial forecasts were disclosed, not only by the top management of Facebook but also by Morgan Stanley, the financial and banking institution that managed the operation.
All this allegedly generated a series of strong expectations among those who believed in the Facebook project in the stock market, thus leading to significant capital investments.
The trading results, however, are evident to all: the stock – initially priced between 38 and 41 dollars per share – now is around 31 dollars: the result is definitely disappointing for the moment.
More broadly, there are also fears that the poor performance of Facebook could generate distrust towards other internet sector companies similarly listed on the stock market.

As if that were not enough, news is spreading that large investors were, in a sense, warned about the poor performances the stock could record, in order to limit losses and to manage to buy shares at a different price compared to smaller investors.
Finally, a legal action is also looming against NASDAQ, due to some technical problems that occurred last Friday and which caused the opening of order and offer communications to be delayed by half an hour.
In response to this, rumors say that funds (around 13 million dollars) have already been made available to immediately patch up the situation, in case of compensation claims.
The situation appears decidedly complicated and although the top management of Morgan & Stanley assures that they followed the usual procedures, exactly the same that are reserved for any kind of placement, it still remains to be clarified whether advanced communication was indeed given to the biggest investors, to the detriment of those who invested less but who – proportionally – lost more.