Facebook Shareholders Seek Revenge—in Court

Facebook has changed the way people communicate and share information—and now it looks like it's going to change the way companies preparing for initial public offerings communicate with their investors.

Some of Facebook's shareholders, claiming the company "selectively disclosed" to preferred investors during the run-up to the May 18 public offering that there was a "severe and pronounced reduction" in forecasts of revenue growth, filed suit against Facebook in U.S. District Court in Manhattan on May 23, according to Reuters.

A disappointing IPO is one thing; shares falling below an initial offering price is not necessarily an indication of the future profitability of a company. But accusations that Facebook shared information about revenue forecasts with one set of investors while going full-blast with marketing efforts for all other investors and potential investors cuts to the heart of the company's credibility.

Facebook's IPO was played as world theater, and now the aftermath is part of the show as well. This social networking powerhouse may become, if the accusations are shown to be well-founded, a leader in investor relations—by negative example.

Follow Steve Goldstein: @SGoldsteinAI

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About Steve Goldstein

Steve Goldstein is editorial director of events for Access Intelligence’s PR News brand, which encompasses premium, how-to content, data and competitive intelligence for public relations professionals; PR News Online; PR News conferences, webinars and awards programs; and PR News guidebooks. Previously at AI Steve was editorial director of min, min ’s b2b and minonline as well as managing editor of CableFAX: The Magazine and CableWorld. Before joining Access Intelligence, he was executive editor of World Screen News, and editor of Film/Tape World, which covered film, television and commercial production in the San Francisco Bay Area.

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