Canadian Class Action Over Facebook’s IPO

For some potential investors, the hype over Facebook’s Initial Public Offering (IPO) was obvious, largely around inflated expectations over advertising revenues and business model.

Facebook is already facing a couple class actions in the U.S., directed against the funders of the IPO. But now Facebook is facing a series of Canadian class actions against Facebook itself.

A class action was filed this past week in Saskatchewan, with another being filed in Ontario tomorrow, and B.C. to follow thereafter. The class action allege that the bank analysts involved were privy to insider information regarding revenue expectations for the second quarter and the full year, but that this information was never made public.

These selected clients benefited from insider knowledge by either avoiding purchases at the inflated prices or shorting shares to detriment of other investors. The suit names underwriters Morgan Stanley, Goldman Sachs and J.P. Morgan as defendants as well.

More information can be found on the Merchant Law website.