Facebook Is Headed To Court…Again

U.S. District Judge Robert Sweet approved actions for retail and institutional investors to pursue their claims in a 55-page decision. Facebook had argued shareholders should not be able to take part in a class action but should pursue their claims individually. The two class actions against Facebook are over growth forecasts contained in advertising before its 2012 stock market float.

Facebook defendants include CEO Mark Zuckerberg, chief operating officer Sheryl Sandberg and other officials.

The plaintiffs claim Facebook hid growth projections ahead of its IPO, which they say encouraged them to buy shares at $38 each when the shares were introduced in May. Shortly after they were introduced, the shares began to lose value and by September they had hit a low of $18.75.

he price remained below the IPO asking price for more than a year, but eventually rebounded. Last week they closed up at $107.26 on the Nasdaq index.

The class action plaintiffs allege that Facebook did not disclose information “about revised revenue projections and the impact that increased mobile usage, at a time when there was little advertising on mobile devices, would have on its revenues.

The Facebook float raised $16 billion.

In his decision, Judge Sweet says that given “the extraordinary size of the case”, allowing two subclasses “in fact adds more weight to the predominance of common questions and answers, practically negating the individualized questions raised”.

A Facebook spokesperson said: “We are disappointed with the decision, and have already filed an appeal. We believe the class certification is without merit and conflicts with well-settled Supreme Court and Second Circuit law.”

Facebook has appointed law firm Bernstein Litowitz Berger & Grossmann and Labaton Sucharow to defend the class action.

Facebook has been involved in a several lawsuits over the years. In 2009, it faced allegations that the social network company had violated California state consumer privacy laws. In May 2012, Stewarts Law USA filed 21 privacy lawsuits against Facebook, alleging it had violated user privacy laws.

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