Melville law firm files suit against Facebook underwriters
Unique U.S. visitors to Facebook rose 5 percent in April to 158 million, according to latest data. Credit: AP
The Melville law firm of Robbins Geller Rudman & Dowd has jumped into the Facebook fray.
The firm filed a federal lawsuit charging that major underwriters of the social networking site’s initial public offering failed to disclose to investors that they had cut their revenue projections for the company just before its IPO last Friday.
Robbins Geller, the Long Island branch of a San Diego-based firm, contends the underwriters disclosed the revisions to a select group of investors but kept most buyers of the stock in the dark. The suit says that the lowered revenue projections prompted a significant drop in the $38-a-share offering price in the first days of trading, which hurt buyers.
The suit names Morgan Stanley and Goldman Sachs, among the underwriters, and also names Facebook executives and board members. The lawyers are seeking class-action status, contending that the plaintiffs could number in the thousands because Facebook sold more than 421 million shares in the IPO.
Robbins Geller filed the lawsuit in U.S. District Court in Manhattan on Wednesday. The three lead plaintiffs are from Pennsylvania and Illinois.
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