Kansas social media users may be interested to learn that a federal appeals court recently upheld a dismissal of the shareholder lawsuit filed against Facebook and several of its corporate executives, including CEO Mark Zuckerberg. The ruling was handed down on July 24 by the U.S. Court of Appeals for the 2nd Circuit in a 3-0 decision.
Reportedly, the plaintiffs in the case had claimed that the company and its executives misled them about the company’s potential for growth before Facebook’s initial public offering in May 2012. The IPO initially opened at a price of $38 per share, but the value of the shares fell to $17.55 by September 2012.
The court ruled the plaintiffs did not have standing to sue, because Facebook made its financial disclosures before it went public. Thus, at the time the disclosures were made, none of the plaintiffs owned any shares in the company. Following Facebook’s IPO, numerous lawsuits were filed against the company when the share prices fell. The ruling in this case affirmed a similar decision issued in February 2013 by a U.S. District Court judge in New York.
Business litigation may involve many different types of disputes, including such things as allegations of deceptive trade practices or securities manipulation. A business that is involved in a dispute may want to seek the help of a commercial litigation attorney. Counsel may be able to negotiate an agreement with the other party to avoid a lengthy process. If an agreement cannot be reached, some contracts will provide that the matter will have to be resolved through binding arbitration.
Source: FOX Business, “Facebook defeats shareholder litigation over IPO”, Reuters, July 24, 2015