Nasdaq, Underwriters Challenge Ruling in Facebook IPO
A federal judge is expected to hear motions next month filed by Nasdaq and the underwriters of Facebook Inc.’s botched initial public offering challenging his rulings allowing a raft of shareholder cases to proceed against them.
U.S. District Judge Robert Sweet of the Southern District of New York last month refused to dismiss shareholder claims, concluding that the underwriters failed to disclose enough about Facebook’s anticipated revenue decreases and that Nasdaq was not immune from liability over technical glitches that occurred that day.
Nasdaq and the underwriters have moved to certify his orders for interlocutory appeal to the U.S. Court of Appeals for the Second Circuit.
Lawyers for the shareholders have opposed the defendants’ motions.
Sweet has scheduled hearings on those motions for Feb. 4 and Feb. 5.
In a joint motion, lawyers for the Facebook defendants and underwriters wrote that Sweet’s unprecedented ruling was inconsistent with U.S. Securities and Exchange Commission rules and would have “widespread and unsettling effects on the capital markets.”
Andrew Clubok, a New York partner at Chicago-based Kirkland & Ellis who represents the Facebook defendants, and James Rouhandeh, head of the litigation department at New York’s Davis Polk & Wardwell, for the underwriters, didn’t respond to a request for comment.
In a separate motion, Nasdaq attorney Stephen Kastenberg, a partner at Philadelphia-based Ballard Spahr, called the dispute “an exceptional case that presents important questions regarding the potential liability of a national securities exchange.”
Kastenberg didn’t respond to a request for comment.
On May 8, 2012, Facebook’s public offering price of $38 per share plummeted soon after its debut, causing millions of dollars in investor losses. The exchange has paid $72 million to the SEC and member companies over its handling of the IPO.