An appeals court has ruled that shareholders cannot sue Facebook or Mark Zuckerberg in a case that accused the company of withholding key financial information from the public until after its IPO.
The shareholders alleged that Facebook had failed to share its projections for mobile ad sales prior to the offering, disclosing them only to analysts who then relayed the information to certain investors.
The plaintiffs complained that Facebook’s stock was “hammered” after it went public and the market learned of the lower forecasts. Facebook’s shares opened at just over US$ 42 on the Nasdaq on May 18, 2012, and fell to the low $ 30-range in the ensuing days. The stock has since risen strongly, trading at around $ 96 on Friday.