US judge names lead plaintiffs in Facebook IPO litigation
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A group of investors including state pension funds in North Carolina and Arkansas will be the lead plaintiffs in securities lawsuits arising out of Facebook Inc's $16 billion initial public offering, a U.S. Judge ruled on Thursday.
The investors, in a proposed class-action case, have accused Facebook of misrepresenting its financial condition in the run-up to the May stock offering. They are represented by law firms Bernstein Litowitz Berger & Grossmann and Labaton Sucharow.
The ruling helps set a structure for the Facebook IPO litigation, a headache for the social media company and a
nagging reminder of the technical glitches in the highly anticipated stock market debut.
U.S. District Judge Robert Sweet in Manhattan also named lead plaintiffs for lawsuits against NASDAQ OMX Group Inc stemming from the IPO. NASDAQ was sued over allegations that orders to buy and sell Facebook were not properly executed on the first day of trading.
Facebook, which has defended its pre-IPO disclosures, declined to comment on Thursday. A spokesman for NASDAQ declined to comment on the litigation.
Facebook shares made their debut at $38 per share, and later fell as much as 50 percent. On Thursday, they closed at $26.90, down 2.6 percent.
Sweet consolidated the cases and picked lead plaintiffs to head up most of the 42 lawsuits before him arising out of the IPO.
Under a federal law governing securities lawsuits, courts routinely select a lead plaintiff in class actions. The lead
plaintiff typically is the shareholder with the biggest losses, though judges have discretion to pick a different investor. The plaintiff group picked to lead 31 cases alleging securities violations against Facebook includes the North Carolina Retirement Systems, Arkansas Teacher Retirement System, the Fresno County Employees' Retirement Association and Banyan Capital Master Fund Ltd.
The group has collectively claimed a combined $7.1 million in losses.