Berger & Montague, P.C. Sues Facebook

PHILADELPHIA, May 24, 2012 /PRNewswire/ -- On May 23, 2012, Berger & Montague, P.C. filed a class action lawsuit in the United States District Court, Southern District of New York, on behalf of all persons who purchased the common stock of Facebook, Inc. ("Facebook" or the "Company") pursuant and/or traceable to the Company's May 18, 2012 initial public offering (the "IPO" or the "Offering"). 

Investors who bought Facebook (Nasdaq:FB) may move the court to appoint them as lead plaintiff no later than July 23, 2012.  A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation.  Investors in Facebook who wish to discuss this action or the lead plaintiff selection process may contact Todd S. Collins, Esquire, Douglas Risen, Esquire or Robin Switzenbaum, Esquire of Berger & Montague, P.C. toll free at 1-888-891-2289 or by e-mail at [email protected], [email protected] or [email protected].  A copy of the Class Action Complaint can be viewed on Berger & Montague's website at www.bergermontague.com or may be viewed online via the U.S. Pacer System.  The case is Goldrich Cousins P.C. 401(k) Profit Sharing Plan & Trust, Individually and on Behalf of All Others Similarly Situated v. Facebook, Inc., Mark Zuckerberg, David A. Ebersman, David M. Spillane, Marc L. Andreesen, Erskine B. Bowles, James W. Breyer, Donald E. Graham, Reed Hastings, Peter Thiel, Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and Goldman Sachs & Co. Facebook operates a social networking company worldwide.  On or about May 16, 2012, Facebook filed with the SEC an amended Registration Statement for the IPO.  On May 18, 2012, the Prospectus with respect to the IPO became effective and 421 million shares of Facebook common stock were sold to the public at $38/share, thereby valuing the total size of the IPO at more than $16 billion.  The Complaint alleges that the Registration Statement and Prospectus contained untrue statements of material facts, omitted to state other facts necessary to make the statements made not misleading and were not prepared in accordance with the rules and regulations governing their preparation.  Specifically, defendants failed to disclose that Facebook was experiencing a severe reduction in earnings growth and that, while the IPO roadshow was in progress, the Company guided the underwriters to materially lower their earnings forecasts for 2012.  During the roadshow conducted in connection with the IPO, each of the lead underwriters reduced its second quarter and full year 2012 earnings estimates for Facebook, which constituted material information that was not shared with all Facebook investors, but rather, was selectively disclosed by defendants to certain large institutional investors and omitted from the Registration Statement and/or Prospectus.

As of May 23, Facebook common stock was trading at approximately $32/share, or $6/share below the price of the IPO.  Plaintiff and the Class have suffered losses of more than $2 billion since the IPO.

SOURCE Berger & Montague, P.C.