Dec 05, 2021 Last Updated 00:11 AM EST

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Facebook will face shareholder class action regarding its 2012 IPO

Dec 31, 2015 06:06 AM EST

Mark Zuckerberg's Facebook is under pressure as the company is currently facing shareholders class action over its IPO back in May 2012. According to the federal judge involve with the case, the shareholders are accusing the social media giant to be hiding its growth forecast prior the IPO.

According to the NBC News, the US District Judge Robert Sweet announces that both retail and institutional investors claiming to have lost their money from buying Facebook shares at the inflated price can make a claim as groups. The latest decision regarding the claim involving $16 billion worth of shares was announced on early this month but was instructed by the judge to be kept away from public.

The decision was made as the judge feels that the claim is not worthwhile to be pursued individually as reported by Bloomberg. Facebook spokesperson, Vanessa Chan responded an email for a statement by the press by stating that "We believe the class certification is without merit" and added that the conflicts are nothing but "with-settled" precedent.

In the same statement released by Chan, she said that Facebook had appealed for the case and the case is expected to be heard again soon. The company stand firm with their belief saying that they are not guilty over the accusation as described by the investors.

The record compiled by Venture Beat shows that Facebook share prices fell below its IPO listing of $38 per share to $17.55 per share on September 4, 2012 for more than a year before rebounded back. Currently, Facebook shares are valued at $107.26 per shares valuing the company at $303 billion.

According to the accusation, investors claim to have lost money due to false forecast given by Zuckerberg and his executives stating that the company will grow better especially in the mobile market. The statement caused its shares prices to increase due to the speculation before plunging back.

In an official statement released by Judge Sweet, "given the extraordinary size of this case," allowing two subclasses "in fact adds more weight to the predominance of common questions and answers, practically negating the individualized questions raised."

In his 55-page statement, he declined previous appeal by Facebook to allow the case to be trial individually and not as a group. He also said that Facebook was in charge for the speculation and understand the effect of their statement to the shares price.

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