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Wolf Haldenstein Adler Freeman & Herz LLP Commences Class Action Lawsuit on Behalf of Investors in Facebook, Inc.

Thursday, May 24, 2012 12:03 PM

Wolf Haldenstein Adler Freeman & Herz LLP, along with the Law Offices of Marc S. Henzel, filed a class action lawsuit in the United States District Court for the Northern District of California, on behalf of all persons who purchased the common stock of Facebook, Inc. (“Facebook” or the “Company”) [NASDAQ: FB] pursuant or traceable to the Company’s May 18, 2012 initial public offering (the “IPO”).

In its May 18, 2012 IPO, Facebook floated over 421 million shares of its common stock to the public at a price of $38 per share on the NASDAQ Global Select Market under the symbol “FB.” Under the terms of the offering, Facebook sold 180,000,000 shares of Class A common stock and selling stockholders sold 241,233,615 shares of Class A common stock. In total, the IPO raised $16 billion for the Company and the selling stockholders.

Plaintiffs seek to recover damages on behalf of all purchasers of Facebook common stock pursuant or traceable to the Company’s IPO (the “Class”). This is a federal securities class action and is brought by Plaintiffs alleging claims under Sections 11, 12, and 15 of the Securities Act of 1933 (“Securities Act”) against Defendants.

The IPO was marketed through the public issuance of the Registration Statement and Prospectus (collectively, the “Offering Documents”) prior to the IPO, as well as through numerous “road shows” that senior Facebook executives attended along with the IPO’s underwriters. The Complaint alleges that the Offering Documents contained material misstatements and material omissions concerning the investment risks of buying Facebook shares. The Prospectus, for example, discussed that the number of active users of Facebook was increasing at a greater rate than the number of ads delivered was increasing, but failed to materially disclose that Facebook’s revenue and revenue growth rate would be lower than the estimates that were originally disclosed and forecasted. Prior to the Company’s IPO, Underwriter Defendants in this action were privately lowering their estimates of the Company’s revenues and revenues growth rate, while at the same time, the Company and Underwriter Defendants were public upwardly revising the projected IPO price to the effective price of $38 per share.


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