Zuckerberg sued for insider trading

If you had a big stake in the Facebook IPO, you've got plenty of reasons to be a little upset about how things have been going since then. A new class action lawsuit takes things a step further by suing Mark Zuckerberg, claiming that the Facebook founder used insider knowledge to unload on $1 billion worth of massively overvalued stock.

The lawsuit says that Zuckerberg and Facebook's management knew that the site couldn't draw in enough advertising revenues to support the stock's $38 IPO share price, and that Morgan Stanley, JPMorgan, and Goldman Sachs all warned them about it.

Rather than doing the upstanding thing and taking action, Zuckerberg decided to dump a large portion of shares while the prices were still good. Only a select few 'major' investors were actually informed about the overvaluation.

Still, it could be worse - Zuckerberg hasn't faced any criminal charges so far, so he doesn't have to worry about any of the stiff penalties involved with insider trading. Yet.

Source: TMZ

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out of pure curiosity, do you really care what websites other people use?

sava700 said,
This is funny as hell! I hope Facebook and he get sued so hard that it gets shut down!!

sava700 said,
This is funny as hell! I hope Facebook and he get sued so hard that it gets shut down!!

Facebook is a corporation, which in court is an "artificial entity". This means, the Company's (not his), money goes to take care of legal action. If he had sole proprietorship of the company, I'd say yeah-- He'd have to foot the bill and if he's broke they could take everything he owns, technically--Even the clothes he's wearing.

http://en.wikipedia.org/wiki/Corporation
http://en.wikipedia.org/wiki/Sole_proprietorship

Thank you, High School Marketing Class...I'm surprised I even remember!!

sava700 said,
This is funny as hell! I hope Facebook and he get sued so hard that it gets shut down!!

not sure if trolling or derping...probally both. at the sime time.

sava700 said,
This is funny as hell! I hope Facebook and he get sued so hard that it gets shut down!!

You mean the stock get shutdown right? Its naive to think because of this the website would be. The website at worst is breaking even and many people have hands. Zuckerburg now could stand to lose more than he hoped to gain off this fiasco.. Maybe he should meet DotCom and let him explain how to do this stuff correctly....

I think a similar thing happened in russia with a 'facebook' equivalent for the country IPO. It just fell HARD. Nobody was interested, and they swore never to do it again...

This case will be short for Zuckerberg, he will win this case just like how he win the case over whose idea was Facebook was first. One thing I do not understand is why would he do this? Does he really need more money, like other said here? Can not wait to see the outcome at the end.

TsMkLg068426 said,
Does he really need more money, like other said here?

He needed the money to pay the huge taxes on his new wealth. He told the world that he was going to do this months ago.

TsMkLg068426 said,
This case will be short for Zuckerberg, he will win this case just like how he win the case over whose idea was Facebook was first. One thing I do not understand is why would he do this? Does he really need more money, like other said here? Can not wait to see the outcome at the end.

When you have money, you hate losing money even more. Losing a million might not seem much to us people if we compare it to the amount of money they have, but its a psychological thing. It's almost as if the more money you have the more you hate losing - and this I found is more prevalent with those who earn money from a business (not entertainers or sport athletes).

It's like having 1 million in your account and knowing next day that you only have 800,000 compared to having $10,000 and knowing the next day that will only have $8,000 - would the feeling be the same in regards to the loss? Let's not forget, when you have money you also know that you can afford the risk i.e. hiring the best lawyers to defend you. When you are just the avg folks you might not feel the same way and decide you cant afford the risk.

Do you think Zuck is gonna Like this? At the end of the day, "public" investors are angry because they lost money. If they had made money - would there be such a negative reaction to all this information that is now coming out and if so to what degree?

MistaT40 said,
Do you think Zuck is gonna Like this? At the end of the day, "public" investors are angry because they lost money. If they had made money - would there be such a negative reaction to all this information that is now coming out and if so to what degree?

Well, if what they're being accused of is true, it's a very big deal...

They should be suing the underwriters, they made hundreds of millions of profit with this. Zuckenberg didn't get any profit.

I think that the whole article is wrong. Zuckenberg is not sued. Morgan Stanley has been sued for informing secretly in advance the big registered players only that the stocks of facebook were not going to give any profit!

Who ever is getting sued here, I hope the end result is that Facebook is gone!! Totally sick of it and I don't even use it!!

cork1958 said,
Who ever is getting sued here, I hope the end result is that Facebook is gone!! Totally sick of it and I don't even use it!!

If you don't even use it, why do you want it gone? To inconvenience other people?

Minimoose said,

If you don't even use it, why do you want it gone? To inconvenience other people?

Well yes, receiving email from Facebeook, visiting many pages that have facebook services running.

It would not surprise me if Fbook either is not around in 2/3 yrs or MS will pick it up dirt cheap & rebrand @ some point

I would say if you didn't realize the 38$ a share was overvalued, then you need to get out of the stock market.

I lol'd at all the people that thought buying Facebook stock was even remotely a good idea. "Oh look, they have a billion 'customers' surely they will hit all 7 billion"

Maybe 3 or 4 years ago this would have been a great idea but not now. Facebook sucks and people are starting to become turned off by the way it wants to know every thing about every second of your life. Not to mention all the companies trying to use it to post "bob is watching Deep Impact.. the porn". Or how there are services that won't run unless you have a Facebook account. Looking at how intrusive it's becoming people are becoming sick of it.

When that starts to happen things go down. Facebook isn't growing like it use to, the brakes have been applied. Not everyone wants Facebook and a lot of current users have or will turn away from it also. It's a social networking site - like MySpace. Remember how that ended? They all end up that way.

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