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Summary:

The hype surrounding Facebook has rapidly turned sour since the company went public in a media frenzy last Friday.

Photo: Zef Nikolla
photo: Zef Nikolla

The hype surrounding Facebook has rapidly turned sour since the company went public in a media frenzy last Friday. Its share price is collapsing and regulators are investigating allegations that Facebook’s big bank partners withheld key insider information.

Now, Reuters reports that shareholders have filed a lawsuit in Manhattan federal court. The suit claims that Facebook and the banks wrongfully concealed weak growth forecasts, leading to shareholders over-paying for the stock when it debuted last Friday.

The Wall Street Journal described how Facebook’s Chief Financial Officer, David Ebersman, decided to increase the number of shares offered in the IPO by 25 percent. At the same time, Ebersman also chose to increase the opening price of the shares to $38.

As a result, the market was flooded with too many shares and the IPO quickly fizzled. Facebook shares have dipped on three consecutive days, hitting a low of $31 yesterday. The shares are up so far this morning.

More to come.

  1. Vincent Tapia Wednesday, May 23, 2012

    Didn’t anyone with half a brain know at least someone with half a brain in the tech industry that didn’t see this coming?! Between FBs filings report, tech insider analysis, biz insider gut checks, and past history (tech bubble of early 2000s), you’re telling me these stockholders are baffled and outraged?! They never saw this coming?! Oooookaaaaay…..

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  2. Luis González M. Wednesday, May 23, 2012

    Sue for what? For their own mistaken investment choices?

    They decided to put their money on a vapor business. They decided to trust Mark Zuckerberg. They have no case.

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    1. JohnnyJohnny Tuesday, May 29, 2012

      “The suit claims that Facebook and the banks wrongfully concealed weak growth forecasts, leading to shareholders over-paying for the stock when it debuted last Friday.”

      Just in case you were unable to do that the first time.

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  3. lovethehomeyfeeling Wednesday, May 23, 2012

    This is too funny… I thought it was just the media blowing up the interest in Facebook stocks. I didn’t know people actually went crazy over purchasing these. Oh, oh, oh… sad! Facebook is clearly on a downhill though, despite whatever is going on with the stocks. Popularity is definitely down since its change to the timeline format. Mobile layout sucks now because there’s a whole chunk of advertisements at the top. I no longer use Facebook on my mobile browser. As for my mobile app… well, there are no advertisements, so… money? Where the heck is it coming from? Well… there is no money. Oops. Hahaha.

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