Facebook, Morgan Stanley sued by shareholders *new!

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BEIJING: Shareholders who bought shares in Facebook’s IPO have filed lawsuits against the Internet company, its executives and the IPO’s lead underwriter Morgan Stanley, Xinhuanet quoted news agencies.

Facebook’s first trading on May 18 was followed by a two-day decline. The stock is still trading nearly 16% below its $38 IPO price.

US financial regulators have already said the Morgan Stanley may have questions to answer over the disclosure of information ahead of its going public.

A writ filed in a Manhattan court, alleges that Facebook’s revised growth data were not disclosed to all investors. Another suit, filed in US District Court in New York, claims Facebook’s IPO documents contained false statements and concealed important facts, such as a “severe reduction in revenue growth” that Facebook was experiencing at the time of its IPO.

Facebook said the lawsuit is without merit. Morgan Stanley refused to comment.

The world’s leading online social network issued 421 million shares on its initial public offering at $38 per share, raising more than $16 billion. It was the largest ever IPO for an Internet company.

On Wednesday, Facebook Inc.’s stock rosed $1, or 3.2%, to close at $32, which was only a small reprieve for its shareholders.