Facebook is facing a number of class action lawsuits, as angry investors seek to recover losses following the company's initial public offering (IPO) last Friday.
A number of lawsuits have been filed against Facebook, the Nasdaq exchange and Facebook's underwriters including Morgan Stanley, after the social media giant's shares fell 18% after only two full days of trading.
According to reports, angry investors have claimed Facebook, Morgan Stanley and other banks that distributed shares had withheld important information from some investors, including negative analyst reports about Facebook.
Facebook has said it will defend the claims “vigorously”.
If details were withheld from certain investors before they bought shares, the issue would be a regulatory concern and could warrant investigation from US authorities.
Another investor has reportedly sued the Nasdaq OMX due to losses that resulted from a computer glitch on Friday that held up or prevented the execution of share orders.
Facebook rolled out its initial public offering (IPO) last Friday (18 May).
The company's share price has been in a nosedive since the beginning of the week. The stocks have sunk 18% from the US$38 IPO price, to US$30.98.
The company's share price bounced back slightly in Wednesday trading, climbing 3.2% to US$32, however the price was still well below the US$38 IPO figure.
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