The debacle that has become Facebook’s salient IPO is worsening still: following a looming investigation by the Securities and Exchange Commission, Facebook and a group of banks are now being sued by shareholders for hiding material information about weakened growth forecasts.
The defendants are being accused of concealing from investors “a severe and pronounced reduction” in Facebook revenue growth forecasts during the IPO marketing process. This particular one was filed in Manhattan this morning, but it’s been revealed that a similar lawsuit emerged in California yesterday.
The reason for these lawsuits is exactly the same reason that the SEC is launching an investigation into the IPO. If these allegations are true, it’s an incredibly large stain on the reputation of Facebook and every bank involved. Already, the controversy and sunken share price of the world’s largest tech IPO will surely put a damper on the amount of other big tech IPOs we may—or now may not—see in the next few years.
Yet, despite this folly, and the fact that most of the public stock market is down today, Facebook shares are currently up 3% in trading.
Welcome to your fourth day in public, Mark Zuckerberg.