Date
18 October 2018
Facebook has settled a lawsuit in relation to its 2012 IPO without admitting any wrongdoing. Photo: Reuters
Facebook has settled a lawsuit in relation to its 2012 IPO without admitting any wrongdoing. Photo: Reuters

Facebook settles class-action lawsuit over 2012 IPO

Facebook has agreed to pay US$35 million to settle claims that its officers and directors misled investors in the company’s 2012 initial public offering, Bloomberg reports.

The company, which operates the world’s largest social media network, didn’t admit wrongdoing as part of the settlement, which was made public in a New York court filing Monday, according to the report.

The lead plaintiffs in the class-action lawsuit, Arkansas Teacher Retirement System and Fresno County Employees’ Retirement Association in California, asked US District Judge Robert Sweet in Manhattan to approve the accord.

The settlement came after the investors had sued Facebook, claiming the firm and its executives overstated the prospects for earnings and growth for the mobile market before the company’s IPO and artificially inflated the value of the company’s shares.

Sweet ordered the case to proceed as a group suit in 2015.

“We believe that resolving this case is in the best interests of the company and our shareholders,” Sandeep Solanki, Facebook’s associate general counsel, said in a statement.

The settlement resolves claims against Facebook, officials including Chief Operating Officer Sheryl Sandberg and director Peter Thiel, and bank underwriters covering a five-day period surrounding the US$16 billion IPO, from May 17 to May 21, 2012, according to Reuters.

Facebook made its market debut on May 18 of that year at US$38 per share and saw its share price languish below that level for more than a year before it rebounded.

The class-action lawsuit has been settled now following efforts at mediation.

Lawyers for the shareholders called the settlement “fair, reasonable, and adequate,” citing the risk of a loss at trial, Reuters reported, citing the court papers.

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RC

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