Most anticipated in tech history $100 billion valuation in May, 2012 Filings- February, 2012 Finally took place

ace on May 18, 2012 Turned out to be a disastrous event, with several lawsuits being filed against the Company and Directors, underwriters and NASDAQ

FACTS
The Offering The Roadshow and Revision The Amendment The Calls The Bet- pre- IPO Short stocking The Glitch The Aftermath

PROBLEMS, ISSUES & LITIGATION

LITIGATION: Actions against NASDAQ- material misrepresentations about Capabilities of its technology and trading platform; negligence in processing trades Securities Actions Derivative Actions- breach of duties to shareholders OTHER ISSUES: Dual Class Structure Regulatory Actions against underwriters- settled- violation of Chinese Wall

THE SECURITIES ACTIONS

Alleged violations of s. 11, 12 (a) (2) and 15 of the Securities Act and s. 20A of the Exchange Act . Allegation that FBs registration statement and prospectus (offering documents) issued in connection with the IPO were false and misleading in violation of the Securities Act. Offering documents allegedly contained untrue statements of material Facts and omitted facts in order to make other statements contained therein not misleading; Co. misrepresented its financial condition by concealing that it was experiencing material decline in revenue growth. FB selectively disclosed this info to preferred investors

 Exchange plaintiffs- claim that Lead underwriters shorted stock for their own profit in violation of the Exchange Act.
In re Facebook IPO Securities and Derivative Litigation-

Dec. 6, 2012-Consolidation of cases and appointment of lead plaintiffs, counsel Feb. 13, 2013- dismissal of shareholder derivative suitsstanding, ripeness; no need to disclose internal revenue Projections- not material?

SECURITIES ACTIONS: SUB- ISSUES

Selective disclosures- does Reg FD apply? Inappropriate dissemination- misleading? What is material? 10b-5 application? Quiet period violations? Gun- jumping?

SOLUTIONS, CONCLUSIONS & REFLECTION

Regulators need to keep in mind: market integrity, investor confidence, level playing field Materiality ambiguous. Need clarity. Is it first a decision for a Judge and then a Jury? Reg FD should apply to IPOs Chinese Wall to be enforced- no settlements for huge securities violations? Aftermath: The JOBS Act Are IPOs inefficient?

SOURCES
Final Rule: Selective Disclosure and Insider Trading, Exchange Act Release No. 33-7881 (Oct. 23, 2000). Craig F. Arcella, The Nuts and Bolts of Road Shows, Practical Law The Journal (May 2011). Alert Memo: Communication with Financial Analysts and Related Disclosure Issues (Cleary Gottlieb Steen & Hamilton LLP, 2012). Michael J. Moore, Facebook IPO Debacle Triggers Legal Debate, Bloomberg, May 24, 2012. Consent Order, In the Matter of: Morgan Stanley & Co. LLC, No. 2012-0042 (Mass. Sec. Div., Dec. 17, 2012). The Atlantic- Facebook, one year later: What really happened in the biggest IPO flop ever, http://www.theatlantic.com/business/archive/2013/05/facebook-one-year-later-what-really-happened-inthe-biggest-ipo-flop-ever/275987/ The Quiet Period in a Noisy World: Rethinking Securities Regulation and Corporate Free Speech, SUSAN B. HEYMAN , http://moritzlaw.osu.edu/students/groups/oslj/files/2013/05/08_Heyman_publisher.pdf In re Facebook, Inc., IPO Securities and Derivative Litigation, updates- http://www.labaton.com/en/cases/Inre-Facebook-Inc-IPO-Securities-and-Derivative-Litigation.cfm FB IPO registration form, SEC, http://www.sec.gov/Archives/edgar/data/1326801/000119312512034517/d287954ds1.htm#toc287954_2 In re Facebook, Inc., IPO Securities and Derivative Litigation, Dec. 6, 2012 order, http://www.entwistlelaw.com/our_work/00024_data/FBOO.pdf

Washington Post, FB moves to consolidate cases, http://www.washingtonpost.com/business/technology/facebook-moves-to-consolidatecases/2012/06/15/gJQAry7SfV_story.html Reuters, FB and banks ask US judge to throw out IPO lawsuit, http://www.reuters.com/article/2013/05/01/usfacebook-ipo-lawsuit-idUSBRE9400I520130501 CNBC, Judge throws out key suit on botched FB IPO, http://www.cnbc.com/id/100457852 The D&O Diary, FB IPO fizzle draws securities suits, http://www.dandodiary.com/2012/05/articles/securitieslitigation/facebook-ipo-fizzle-draws-securities-suits/ Chron, Litigation over FB IPO just starting, http://www.chron.com/business/article/Litigation-over-FacebookIPO-just-starting-3581490.php Wall Street journal, law Blog, Lead lawyers appointed in FB IPO litigation, http://blogs.wsj.com/law/2012/12/06/lead-lawyers-appointed-in-facebook-ipo-litigation/ FB, banks, sued over pre- IPO analyst calls, Reuters, http://www.reuters.com/article/2012/05/23/us-facebooklawsuit-idUSBRE84M0RK20120523 Harvard Law School Forum on Corporate Governance and Financial Regulation, Blog, Rethinking one share, one vote, http://blogs.law.harvard.edu/corpgov/2013/04/19/rethinking-one-share-one-vote/ Reuters, Facebook IPO derivative ruling: a cure for multiforum madness?, http://blogs.reuters.com/alisonfrankel/2013/02/15/facebook-ipo-derivative-ruling-a-cure-for-multiforum-madness/ PepperLaw, Obtaining Early dismissal of shareholder derivative actions, http://www.pepperlaw.com/publications_article.aspx?ArticleKey=2575

FAQs about Reg FD, http://www.mofo.com/files/uploads/images/faqs-regulation-fd.pdf SEC, Regulation FD, http://www.sec.gov/divisions/corpfin/guidance/regfd-interp.htm MWW Absolute Value, Blog, FB- does Reg FD apply?, http://www.mwwabsolutevalue.com/2012/05/24/facebook%E2%80%93-does-reg-fd-really-apply/ Reuters Blog, Roadshows, Analysts and jumping the gun, http://blogs.reuters.com/financial-regulatoryforum/2012/05/25/road-shows-analysts-and-jumping-the-gun-the-facebook-ipo/ FB, The JOBS Act and Abolishing IPOs- http://object.cato.org/sites/cato.org/files/serials/files/regulation/2012/11/v35n33.pdf