New York: Disgruntled Facebook shareholders have sued Facebook owner, Mark Zuckerberg, alleging he had inside info that the stock was grossly overvalued, and he protected his own financial hide by quickly unloading a ton of Facebook stock.
According to TMZ, the lawsuit claims Zuckerberg and his cronies hid the fact that there was a foundational flaw in the Facebook business model—the lack of advertising revenue to support the IPO price of $38.
The lawsuit claims Morgan Stanley, JPMorgan, and Goldman Sachs knew that Facebook IPO was seriously overvalued, but that information was “selectively disclosed” to the largest investors, and not to the smaller ones.
Since Facebook went public, shares in the company—which were once valued at $104 billion—tumbled from a peak of $38 to $26 per share in the week following Facebook’s IPO debut.
Facebook investors sue Mark Zuckerberg over IPO