Judges dismisses Facebook IPO suit, says risks were disclosed
Facebook got some welcome news regarding its lawsuit woes.
A U.S. District Court in New York dismissed a shareholder lawsuit that accused Facebook executives like Mark Zuckerberg and COO Sheryl Sandberg of failing to disclose risks. In a separate lawsuit against NASDAQ's role in the the botched Facebook IPO, the same judge denied a motion to move the case to a different court.
"We are pleased with the court's ruling," Facebook said in a statement.
The first dismissed lawsuit centered on allegations that Facebook failed to disclose the risks of its advertising business as consumers shifted to mobile devices.
For the dismissed NASDAQ lawsuit, Judge Robert W. Sweet denied a motion to move the trial to another court.
As TechCrunch reports:
The plaintiff in that case, Michael Zack, wanted the case to be heard in New York's State Supreme Court. He had filed a case on behalf of all Facebook investors, charging NASDAQ with negligence in the design of their trading systems.
As Facebook's opening trade was delayed, trades and order cancellations weren't being handled normally as the auction software couldn't keep up with last-minute order changes. Slightly after trading had started, Zack said he issued a "cancel order" around 11:30 a.m., but it wasn't processed until an hour and a half later.
In the court's ruling, Sweet argued that issues with NASDAQ's trading system fall under federal, not state, jurisdiction since the system is designed in accordance with the SEC. This suit is one of 11 class action filings against NASDAQ for the Facebook IPO.
Yes, you read that right: there are almost a dozen class action lawsuits against the market maker for their poor handling of the Facebook IPO.
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