Stop whining! Message to Facebook buyers who lost out in the IPO fiasco
With a number of losing shareholders set to sue Facebook following its controversial IPO last week, Bloomberg columnist Jonathan Weil has delivered a blunt message to "whiny investors" .
Facebook lawsuits grow
He says, "Let's get one thing straight. If an investor (and I use the term loosely) lost money this past week buying Facebook shares, that investor is the person who bears the responsibility for making a bad trade."
Weil's outburst http://tinyurl.com/buulaqm came as the list of possible lawsuits grew.
Meantime, the Wall Street Journal says today that Facebook’s IPO, one of the highest profile stock offerings ever, may develop into the most litigated - with a potential for billions of dollars in damages.
The potential damages in this type of case are, according to the WSJ, the difference between the purchase price ($38) and the stock price at the time of the filing of the case ($32 as of yesterday).
The main alleged grievance is that analysts at Morgan Stanley and Goldman Sachs cut their revenue forecasts on Facebook as the investor roadshow went on - but not everyone got to know about it.
The state of Massachusetts sent a subpoena to Morgan Stanley following the reports. The Wall Street Journal said other plaintiffs' lawyers had reported filing suits in other courts throughout the country.
Among the possible claims:
* A Maryland investor seeking to represent all Facebook investors alleges that Nasdaq was negligent in how it handled the first day of trading, causing investors to lose money
* A lawsuit filed by an investor in California Superior Court in Los Angeles contends that Facebook made materially misleading statements in its prospectus.
* A third lawsuit in Federal District Court in Manhattan has been filed on behalf of three investors and seeking class action status against Facebook’s underwriters, and the company.
The suit, which is seeking class-action status, alleges changes made to Facebook's offering document a week before the IPO priced didn't accurately portray the impact on Facebook's revenue growth.
What was new in the amended filing? Facebook purportedly said that its mobile users were growing rapidly in the second quarter- but advertising revenue wasn't keeping pace.
Facebook said in a statement that it believes the lawsuit is without merit and will "defend ourselves vigorously."
Facebook's shares which were $31.00 at Tuesday's close, down $7 on the IPO price, were up yesterday to $32.20 valuing the company at about $70 billion.
Weil's pungent view, "Nobody forced anyone to buy Facebook shares. Blaming the company's underwriters for the stock's plunge is like losing money at a casino and then waiting until afterward to complain about the house's odds."