September 20, 2012
The Judicial Panel on Multidistrict Litigation is to hear arguments in Manhattan federal court Sept. 20 over how the investor and shareholder lawsuits can progress, according to a Reuters report.
While it is anticipated a judge in New York will hear the cases, some investors, whose cases are in California, want the proceedings to stay in San Francisco. They argue being near Facebook’s home base would offer better access to witnesses and documents.
A few cases were also filed in federal courts in Florida and the District of Columbia, and in California state court, Reuters reported.
Investors sued Facebook after a flawed preliminary public offering May 18. Technical glitches at the NASDAQ exchange and allegations the company deliberately divulged unfavorable information about its business prospects to privileged investors is at issue.
Defense against the lawsuits could cost Facebook millions of dollars.
Facebook’s stock plunged as much as 50 percent after it was introduced at $38 per share.
In at least 33 of the suits seeking class action status, investors have asked courts to hold the company and its underwriters responsible for causing their losses, Reuters reported.
Facebook, however, maintains it did not break any rules, adding NASDAQ is to blame for trading glitches on the day of the offering, the story said.