According to TMZ, the suit alleged that Zuckerberg hid from most investors the fact that the Facebook business model was not built to sustain enough advertising revenue to support an IPO price of 38 dollars a share.
Underwriters Morgan Stanley, J.P. Morgan Chase, and Goldman Sachs all warned Zuckerberg before the IPO that the company was overvalued, but that the information was ‘selectively disclosed’ to only the social network’s largest investors, the lawsuit added.
Meanwhile, Facebook’s stock fell three percent overnight and closed this morning at a new low.
The firm’s shares slid 82 cents to close at 26.90 dollars, after briefly trading as low as 26.44 dollars.
Facebook shares have fallen nearly 30 per cent since their May 18 debut.
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