Florida residents are no doubt familiar with Facebook's recent initial public offering and change from a private investment to a public investment. With such a public and widely utilized business, it is no wonder that everyone seems to be keeping a watchful eye on the social media company. These watchful eyes, though, seem to be resulting in some business litigation through lawsuits and suspicion of the company acting wrongly.
Only five days after the IPO, the company faced two congressional inquiries and growing numbers of lawsuits. The suspicion seems to have begun when the IPO appeared to be suffering. In the first few days, declines in trading were noted. This led to investors losing money initially.
Thereafter, investors began to claim that Facebook's IPO documents left out important facts and provided false information. Additionally, banks involved in arranging the IPO have been challenged by claims they shared important information concerning the IPO with some clients but not others, preventing fairness among all investors.
At this point, it is unclear whether there has been foul play of any sort on the part of Facebook or any of the banks involved in arranging the IPO. As Florida residents may know, the stock market is a risky game to play, and even a well-prepared company or individual stands the chance of a mistake or an unexpected turn. Facebook appears to have taken steps to meet with analysts and professionals prior to the IPO in order to make accurate financial projections. Briefings are set to be held with the social media company to determine whether hearings and further business litigation is necessary.
Source: Bloomberg Businessweek, "Facebook shares stabilizing, but probes mount," Barbara Ortutay, May 24, 2012