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Wednesday, May 23, 2012

Mark Zuckerberg And Morgan Stanley Sued Over Float

Facebook, its founder and several banks behind its flotation last week have been sued by disgrunteld shareholders in a New York court.

The shareholders have claimed the defendants hid the social networking site's weakened growth forecasts ahead of its $16bn (£10bn) initial public offering (IPO).

The defendants were accused of concealing during the IPO marketing process "a severe and pronounced reduction" in Facebook revenue growth forecasts, resulting from increased use of its app or website through mobile devices.

The lawsuit was filed in the US district court in Manhattan, according to a lawyer for the plaintiff.

The legal action comes after regulators said they are investigating Morgan Stanley, the lead investment bank that handled Facebook's IPO last week.

A report emerged that claimed it selectively informed clients of an analyst's negative report about the company before the stock started trading.

Financial Industry Regulatory Authority boss Rick Ketchum, the self-policing body for the securities industry, said the question is "a matter of regulatory concern" for his organisation and the powerful Securities and Exchange Commission (SEC) watchdog.

The top securities regulator for Massachusetts, William Galvin, said he had also subpoenaed Morgan Stanley over the claim only divulged to some clients the revenue cut estimates for Facebook. Read More