Facebook victorious in shareholder IPO battle
Court rules shareholders have no legal standing as no stock held at time of fiduciary breach
A US federal appeals court has found for Facebook executives in the social media company's legal battle with shareholders over its ill-fated IPO, Reuters reported.
Circuit Judge Dennis Jacobs for the 2nd US Circuit Court of Appeals, upheld an earlier dismissal of the shareholders' action by District Judge Robert Sweet in Manhattan.
The shareholder's suit centres on Facebook's non-disclosure of downgraded earnings projections stemming from analysis of the mobile advertising market conducted prior to its $16bn public offering in May 2012. The plaintiffs argue that Facebook executives should have publicly announced their concerns about future earnings, but Jacobs ruled that an investor who bought shares after the IPO had no legal standing in relation to any wrongdoing on the part of Facebook.
"A proper plaintiff must have acquired his or her stock in the corporation before the core of the allegedly wrongful conduct transpired," Jacobs wrote.
Defendants named by the plaintiffs include Facebook chief executive Mark Zuckerberg, chief operating officer Sheryl Sandberg, Goldman Sachs and JPMorgan Chase.
A separate case has also been filed by shareholders against Facebook itself.