Facebook wins first IPO shareholder case
The company did not withhold certain projections from investors, a ruling said
IDG News Service - Facebook scored an initial legal victory in its IPO case following a federal judge's dismissal of a group of investor lawsuits filed against the company.
More than 30 lawsuits were filed against Facebook after it went public last May, alleging that the company shared business information with analysts who then shared the information with large institutional investors without disclosing it to the wider investing public.
Facebook, however, did make "extensive warnings" in its registration statement, drafts of the registration statement and in its final IPO documents about the health of its business tied to mobile trends, according to a ruling filed Wednesday in the U.S. Court for the Southern District of New York.
"Even if internal projections could be considered material to the IPO, [the plaintiffs] have not demonstrated that the Facebook projections would have 'significantly altered the total mix of information in the marketplace,' considering that these disclosures were publicly disseminated," the ruling said.
"Based upon our experience in the second quarter of 2012, to date, the trend we saw in the first quarter of [daily active users] increasing more rapidly than the increase in number of ads delivered has continued," Facebook said in its registration statement filed May 16 with the U.S. Securities and Exchange Commission, two days prior to its IPO.
The social network has come under pressure to increase its revenue as users flock to mobile devices, but advertisers maintain a stronger presence on the desktop. The company reported during its fourth-quarter earnings call that the number of daily mobile users had exceeded daily Web users for the first time ever, though its mobile business constitutes 23% of its total advertising revenue.
Wednesday's ruling addressed the first several IPO lawsuits, which have been classified as derivatives cases. The judge has yet to rule on the remaining class-action securities lawsuits, but Wednesday's ruling addresses the same core allegation related to disclosures.
Basically, the ruling shows that "companies don't have a duty to disclose their projections as part of their written IPO documents," said Facebook attorney Richard Bernstein. "The law has rejected for decades the contrary argument that Facebook plaintiffs have made," he said.
Plaintiffs have 20 days to replead the case. A briefing for the remaining IPO cases will be completed in mid-July; a decision is expected later in the fall.
- 15 Non-Certified IT Skills Growing in Demand
- How 19 Tech Titans Target Healthcare
- Twitter Suffering From Growing Pains (and Facebook Comparisons)
- Agile Comes to Data Integration
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- The Critical Role of Support in Your Enterprise Mobility Management Strategy Most business leaders underestimate the importance of tech support when they choose an EMM solution. Here's what to put on your checklist.
- Separating Work and Personal at the Platform Level: How BlackBerry Balance Works BlackBerry® Balance™ separates work from personal on the same mobile device, right at a platform level. Find out how it can work for...
- Protection for Every Enterprise: How BlackBerry Security Works Get an IT-level review of BlackBerry® Security, addressing data leakage protection, certified encryption, containerization and much more.
- Future Focus: What's Coming in Enterprise Mobility Management (EMM) Find out why Enterprise Mobility Management (EMM) solutions that are truly future-ready must be designed to enable Machine-to-Machine (M2M) capabilities and much more.
- Live Webcast On-demand webinar: "Mobility Mayhem: Balancing BYOD with Enterprise Security" Check out this on-demand webinar to hear Sophos senior security expert John Shier deep dive into how BYOD impacts your enterprise security strategy...
- Live Webcast Unmasking the Differences between Consumer and Enterprise File Sync & Share The consumerization of IT combined with the rapid pace of the modern mobile workplace is forcing enterprise IT teams to evaluate file sync...
- Live Webcast Workforce Mobilization for Improved Productivity A mobility research director from Aberdeen discusses reasons for extending legacy applications to mobile devices, and an integration strategist from Attachmate shows how...
- Getting Ready for BlackBerry Enterprise Service 10.2 Find out how BlackBerry® Enterprise Service 10 helps organizations address the full spectrum of EMM challenges, while balancing the needs of both the...
- Containerization Options: How to Choose the Best DLP Solution for Your Organization This webcast outlines a framework for making the right choice when it comes to containerization approaches, along with the pros and cons of... All Mobile/Wireless White Papers | Webcasts