On November 26, 2018, the Honorable Robert W. Sweet of the Southern District of New York approved a $35 million settlement in a securities class action related to Facebook’s May 2012 initial public offering, one of the largest IPOs in history. During the final approval hearing for the settlement, Judge Sweet called the result “quite a monumental achievement” and described the nearly six-year litigation as “a paradigm of the way in which our system achieves justice.” Judge Sweet further stated, “[T]o have a difficult case like this thoroughly explored, all the facts, relevant facts really known, brought out, and then to have it resolved in the best interests of the class and of the defendants by skilled and very able lawyers, is really the hallmark of a justice system that we, I think we can all be very proud of.”
The action, which was brought by a class of purchasers of Facebook Class A common stock, alleged that Facebook made materially untrue and misleading statements in its IPO Registration Statement and Prospectus. Shortly after the IPO, Reuters reported that analysts from three of the lead IPO underwriters had cut their estimates for Facebook in the midst of its roadshow due to the problems the company had in driving advertising revenue through mobile users. In response to this news, Facebook’s stock price fell 18 percent below the IPO price.
In his order approving the settlement, Judge Sweet noted “the quality of Plaintiffs’ representation is evident from the fact that Plaintiffs survived motions to dismiss filed by some of the nation’s preeminent law firms.” Labaton Sucharow and co-counsel were successful in prevailing on two attempts to dismiss the case in December 2013 and March 2014. The court granted class certification in December 2015.
The case is In re Facebook, Inc., IPO Securities and Derivative Litigation, No. 12-md-02389 (S.D.N.Y.). Representing co-lead plaintiff Arkansas Teacher Retirement System, the Labaton Sucharow team was led by partners Thomas A. Dubbs, James W. Johnson, and Thomas G. Hoffman, Jr.