The social media giant Fcebook has been hit with a new initial public offering (IPO) lawsuit. Investor Gaye Jones filed a new case against Chief Executive Mark Zuckerberg and the company's underwriters on Tuesday, according to Reuters.
Jones' lawsuit alleges the company directors and officers knew that Facebook did not disclose weaker revenue trends as more users did not disclose weaker revenue trends as more users accessed the website through mobile devices. The complaint alleges that information had been selectively shared with the company's IPO underwriters and key investors.
Jones is a stockholder of Facebook, Inc. The lawsuit seeks to force the directors and other defendants to disgorge the money they made from selling stock through the IPO which they allegedly knew was overpriced.
"The defendants were unjustly enriched because they realized enormous profits and financial benefits from the IPO, despite knowing that reduced revenue and earnings forecasts for the company had not been publicly disclosed to investors," said the complaint.
Facebook disputes the charges leveled against them.
"We believe this lawsuit is without merit and will defend ourselves vigorously," the company said in a statement.
Jones' lawsuit is a derivative case, meaning the investor seeks to step into the shoes of the company and any money recovered from Zuckerberg and others through a settlement or judgment would be paid to Facebook, not shareholders. Four previous and very similar derivative cases were dismissed last month by U.S. District Court Judge Robert Sweet in Manhattan.
In addition to noting that shareholders did not own stock prior to the IPO, Sweet said that although plaintiffs claimed Facebook hid facts from investors, the company "repeatedly made express and extensive" warnings about the increased use of mobile applications, Reuters reported.
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