Mark Zuckerberg and mega-social media site Facebook have both been in
the news quite a bit recently, between the company’s disastrous IPO and
the many, many people who are unhappy with it. Now, a class-action lawsuit
is being brought against Zuckerberg by some of those unhappy investors,
who claim the mogul unloaded a huge amount of stock on inside
information that it wasn’t worth its estimated value.
Zuckerberg is no stranger to legal battles; last year he was sued over a Facebook page
that garnered a wave of backlash from the Jewish community, and just a
week after the company went public, they were sued for hiding “unfavorable growth forecasts” before the IPO. Oh, and there was that whole Winklevoss scandal.
This lawsuit, however, could get big very quickly. It claims that JP
Morgan, Goldman Sachs, and Morgan Stanley all tipped off only the
investors with the largest stake in the company about the serious
undervalue of the stock well before the IPO, leaving everyone else who
invested their hard earned dollars in the dust. As of Monday morning, shares had fallen to around $26.00 apiece, far below the initial $38.00 projected value.
Former Wall Street analyst Henry Blodget spoke up on behalf of
investors, calling the insider trading allegations “absurd and unfair.”
He goes on to say that the SEC should change their rules about such
information being shared, asserting that every investor has the right to
know what’s going on with the IPO.
“This is an absurd and unfair practice,” he said.
“The estimates themselves are material information–the consensus of
smart, well-trained analysts who have worked with the company’s
management to develop realistic forecasts. Most investors don’t even
know that these estimates exist, let alone that they’re whispered
verbally to only a handful of big investors. All potential investors
should have easy access to these estimates, as well as to any logic
underlying them. The SEC needs to change the rules here.”
While the exact amount of Zuckerberg’s sold shares isn’t known,
rumors put it around a billion dollars, and that adds up to a lot of
angry stockholders. There have been accusations
that Zuckerberg himself is to blame for the disastrous IPO on the
grounds that he is an egomaniac who allowed the company to offer
inflated projections in order to justify Facebook’s $100 billion
valuation.
The fact that Facebook’s head honcho took off on a honeymoon right
after the stocks began to tank isn’t sitting well with investors,
either. It looks like this case could get nasty very quickly as the very
people who are supporting Facebook are demanding answers and
accountability from its owner.
Miss Day @March_Aries22 RT @AskKissy LOL. Mark got over.. Aren’t you glad you couldn’t afford to buy the stock? http://t.co/mmDLvsoT
Tony Sharp @subtlearray When are people going to realize Zuckerberg is a horrible person? “Facebook, Mark Zuckerberg, Banks Sued Over IPO” http://t.co/wJIwuKEN
Jennifer Simon @JenniferLSimon I guess someone is having a more stressful day than me…Mark Zuckerberg Sued For Unloading Facebook Stock #WebProNews http://t.co/LyD1A4Ip
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