Investors sue Facebook, Mark Zuckerberg, Morgan Stanley amid IPO probe

Three investors filed a lawsuit on Wednesday against Facebook and CEO Mark Zuckerberg, along with lead underwriter Morgan Stanley and a host of other underwriters, claiming they withheld negative information about the multi-billion dollar company’s initial public offering. One of the plaintiff lawyers in the class action suit, Robert Weiser, said, “It appears as though material information was not disclosed. We believe that the offering was conducted unfairly and it harmed public stockholders.”

Investors filed the suit in the U.S. District Court for the Southern District of New York in Manhattan. Morgan Stanley shared a negative evaluation of the social network with major clients prior to Facebook’s IPO, which debuted on the Nasdaq last week, according to Reuters. The lawsuit states “certain of the underwriter defendants” were given estimates for how Facebook would perform in the second quarter and for the full year. The plaintiffs claim the “revisions were material information which was not shared with all Facebook investors, but rather, was selectively disclosed by defendants to certain preferred investors and omitted from the registration statement and/or prospectus.” A Facebook spokesperson told CNN “We believe the lawsuit is without merit and will defend ourselves vigorously.” A spokesman for Morgan Stanley refused to comment.