REGINA — Regina lawyer Tony Merchant and his firm have filed a Canada-wide class-action lawsuit against Facebook, its founder and financial institutions that helped in its disappointing initial public offering (IPO) of stock.
It was filed Friday on behalf of Reginan Shayla Dewhurst.
The suit’s statement of claim says Facebook “discreetly contacted” more than 20 financial analysts, including some working for the offering’s underwriters, to tell them 2012 and 2013 profit estimates would be lower than expected.
“Despite their obligation to promote Facebook’s IPO in a fair manner, the Underwriter Defendants only disclosed this secret information to certain selected clients, thus curtailing demand for Facebook shares in the IPO,” the statement of claim says.
“This enabled selected clients to benefit from insider knowledge to avoid purchasing shares of Facebook at inflated prices or to short Facebook’s shares to the detriment of other investors.”
It further says Facebook failed to disclose pending litigation, and possible shortfalls in advertising revenues because users were accessing it with mobile devices or mobile apps, so that the corporation does not “derive any meaningful revenue” from them.
A class-action lawsuit must be certified by a judge in order to proceed, so the filing of the claim is only the first step. A statement of claim contains allegations not yet proven in court.
Defendants in the suit are Facebook founder Mark Zuckerberg, Facebook investor-director Peter Thiel, Facebook itself and financial firms Allen & Company LLC, Barclays Capital Inc., Goldman, Sachs & Co., J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated; Morgan Stanley & Co. LLC and RBC Capital Markets LLC.
A news release accompanying the statement of claim, which was filed in Regina, notes the Merchant Law Group’s class actions on subjects ranging from residential schools to silicon breast implants and from pharmaceuticals to the Canadian Wheat Board.
Read more: http://www.leaderpost.com/business/Regina+lawyer+begins+class+action+suit+against+Facebook/6754426/story.html#ixzz1xO6VpKCW
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