In the wake of the poor and technically troubled launch of Facebooks IPO, the company and its lead underwriter Morgan Stanley are now the subject of a new class action lawsuit. Business Insider reports that a group of Facebook shareholders filed the lawsuit today. They are claiming that the company lowered its financial estimates in the middle of its IPO "road tour", before the stock launched on Friday.
The lawsuit claims that Facebook only told the large institutional investors about its lowered financial expectations during the "road show", leaving all the other interested Facebook stock buyers without that knowledge. Because that information was not put into Facebooks prospectus, the lawsuit claims it "contained untrue statements of material facts."
Reuters reports that a Facebook representative said of this new legal battle, "We believe the lawsuit is without merit and will defend ourselves vigorously". Morgan Stanley declined to comment.
Meanwhile, Facebooks stock price may finally have hit a bottom, at least temporarily. After two straight days of large declines in its price that totaled around 20 percent, the stock price is up over 2 percent as of this writing on the NASDAQ stock market.