Facebook Inc, chief executive Mark Zuckerberg, and several banks led by Morgan Stanley were sued by shareholders, who claimed the defendants hid the social networking leader&rsquo;s weakened growth forecasts ahead of its USD 16 billion initial public offering. <img alt="" src="/imagedata/2012/may/Mark.jpg" style="width: 500px; height: 708px; " /> Financial woes: Mark Zuckerberg lost USD 2 billion as Facebook shares continued to slump. File pic The defendants are claimed to have concealed from investors during the IPO marketing process &ldquo;a severe and pronounced reduction&rdquo; in Facebook revenue growth forecasts. The news comes as Morgan Stanley, the bank in charge of the IPO, is being investigated over possible securities fraud.u00a0The US bank has been accused of failing to warn smaller investors of a more negative assessment of Facebook&rsquo;s future profits. It is claimed that several major investors had been pre-warned that a Morgan Stanley analyst had cut the amount of money he expected Facebook to make. The advance notice allowed the investors to either avoid the stock completely or sell immediately after they floated at USD 38. &ldquo;The allegations, if true, are a matter of regulatory concern,&rdquo; said Rick Ketchum, the head of the Financial Industry Regulatory Authority.u00a0Mary Schapiro, head of the Securities and Exchange Commission, said: &ldquo;There is a lot of reason to have confidence in our markets and the integrity of how they operate, but there are issues we need to look at specifically with regard to Facebook.&rdquo; It was reported that Morgan Stanley analyst Scott Devitt cut his estimate for Facebook&rsquo;s revenue this year to USD 4.85 billion from a previous figure of more than USD 5 billion, adding that the business faced multiple problems. He claimed that growth in revenues could be hit by the increase in the use of mobile devices to look at Facebook, a medium the company&rsquo;s advertising system has so far failed to crack. William Gavin, the securities regulator for Massachusetts, issued the bank with subpoenas.u00a0It comes amid accusations Morgan Stanley valued Facebook too aggressively. Other side Morgan Stanley said IPO procedures used were &ldquo;in compliance with all applicable regulations&rdquo;.u00a0&ldquo;After Facebook released a revised S-1 [IPO] filing on May 9 providing additional guidance with respect to business trends, a copy of the amendment was forwarded to all of MS&rsquo;s institutional and retail investors and the amendment was widely publicised in the press at the time,&rdquo; the bank said.

Pakistani doctor, who helped find Osama, jailed

Facebook founder, bank sued by shareholders, who claimed the defendants hid the social networking site's weakened growth forecasts

Zuckerberg sued over IPO

Trending Stories

Latest Photos

Latest Videos

Latest Web Stories

Mid-Day Fast

Home / News / World News / Article / Zuckerberg sued over IPO

Zuckerberg sued over IPO

Trending Stories

Latest Photos

Latest Videos

Latest Web Stories

Mid-Day Fast