IPO rejected by Facebook

WASHINGTON: Facebook on Wednesday said it would “vigorously” defend itself as it rejected a New York investor lawsuit over its $16 billion initial public offering last week. “We believe the lawsuit is without merit and will defend ourselves vigorously,” a Facebook spokesperson said. The Brian Roffe Profit Sharing Plan and two other investors sued Facebook and its lead underwriters in New York district court, accusing them of holding back crucial information from smaller investors ahead of Friday’s IPO. They said that the IPO documents put out by the company and underwriters “contained untrue statements of material fact” and omitted other crucial information for investors, in violation of securities laws. Facebook went public last Friday in the country’s second largest IPO ever, but the shares plunged 18 percent in the days after amid allegations that big institutional investors learned unfairly of analyst downgrades just days before the shares were traded. Several other law firms have announced investor class action suits against the social networking giant and its underwriters on the same ground.