Class action lawsuits* have already been filed by investors and companies arguing they were suckered into buying stocks on the basis of misleading and withheld information. The estimates of future earnings were based on projections akin to a wide, white marble staircase beset with angels and rainbows, going through the skies to a white castle of world dominance. Which might be descriptive of the place Mark Zuckerberg has been living, in his mind, for the last 6-7 years.
As time progresses from now on, the few people left who are considering investing in Facebook, are going to have to take into account the avalanche of bad news and the increasing scrutiny of future earnings decorating the already grim downfall of the stock. Maybe the Wall Street Journal article below is not too far off.
The suit claims that Facebook executives told the underwriter banks to lower their revenue projections for the company, and that the banks relayed this information to favored clients but not to the general public.
If true, this would likely be in violation of federal securities law, which dictates that all "material information" -- facts that could influence investor decisions -- be disclosed by public companies and companies planning to go public in their filings with the Securities and Exchange Commission.
Documentation to support this claim is not provided in the lawsuit, though Darren Robbins, a lawyer for the plaintiffs, said his team had access to "witnesses and shareholders and other sources of information."