Facebook moves to consolidate cases
By Hayley Tsukayama,
Facebook has asked to consolidate lawsuits against the company — the fallout from its initial public offering — into one case. On Friday, the company filed the request with the Southern District Court in New York.
(Donald E. Graham, chairman and chief executive of The Washington Post Co., is a member of Facebook’s board of directors and is named as a defendant in the filing.)
More than 40 suits have been filed against the company and Nasdaq because of losses related to the social network’s market debut on May 18, the filing said.
Facebook said overlapping issues between the cases indicate that they should be centralized.
Addressing the allegations made in the lawsuits, Facebook said it “vigorously” disputes all the claims against it, in a footnote, and also gave a timeline of events in the general body of the document.
In particular, the company said that it acted within regulations in response to allegations that it gave preferred investors a reduced-earnings forecast.
“Plaintiffs rely heavily on post-IPO articles as sources for their allegations,” the company said. “But they ignore that what Facebook and the Underwriter Defendants allegedly did both followed customary practices and did not violate any rules.”
The filing also cites several media reports that attribute Facebook’s poor stock performance to actions by Nasdaq, which has admitted that technical glitches may have lost some Facebook investors money.
Because so many of the cases deal with issues related to the Nasdaq, the company argued, New York is the most logical place for the case to be heard.
“It is personnel at Nasdaq and the Underwriter Defendants located in New York that will be witnesses about trading errors caused by Nasdaq and their effects on Facebook’s share price,” the filing said.
The lead underwriters for Facebook’s IPO, and therefore the ones who would speak to whether analysts improperly shared information with select investors, are also located in New York, the filing said.
Nasdaq has put an investor-compensation program into place for those who can prove they lost money due to the glitches on May 18. The social network has been quiet about the effects of its market debut, although its stock is still down around 20 percent from its debut price of $38 per share.
Late Friday afternoon, Facebook was trading up about 4 percent at a price of $29.39 per share.