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SUED! Investors drag Facebook to court

business Updated: May 24, 2012 18:26 IST

ANI
Highlight Story

A-woman-shoots-a-video-of-the-sign-at-the-entrance-to-the-Facebook-main-campus-AFP-Robyn-Beck

Investors have sued Facebook and its Wall Street advisers over claims that the social media giant misled them about the company’s business prospects before its record flotation.

The investors filed two lawsuits on Wednesday following allegations that only major potential investors were told about the reductions that analysts at the banks made during Facebook''s fortnight-long sales pitch to hopeful shareholders.

“Some insiders and investors were preferred over others,” The Telegraph quoted Darren Robbins, a lawyer for one set of retail investors, as saying.

“Everyone made money in this process, but it was the ordinary main street investor who was left holding the bag,” he added.

The Californian company and banks, including Morgan Stanley and Goldman Sachs, are accused of failing to let all potential investors know that the banks had cut their revenue estimates for Facebook, in advance of the shares launch.

The investors claimed that they have lost 2.5 billion dollars from buying shares in the world''s largest social networking site.

The spate of legal action is the latest blow of Facebook’s 104 billion dollar initial public offering last week that saw investors scrambling to own a slice of a company, which has reshaped to over one billion people communicating online.