The fallout from Facebook's botched initial public offering is moving to the courtroom as shareholders sue for losses. Many of the social network's employees became millionaires after the market debut.
Facebook's chief technology officer resigned his post on Friday to begin a new startup with money earned from the company's initial public offering, while dozens of shareholders have filed lawsuits against the social network for losses sustained during its hyped market debut.
Bret Taylor, who oversees the social network's main platform and mobile business, said he would leave Facebook this summer to start a new company with a friend. Taylor did not mention what kind of company he was interested in starting.
"I'm sad to be leaving, but I'm excited to be starting a company with my friend Kevin Gibbs," Taylor said. "While a transition like this is never easy, I'm extremely confident in the teams and leadership we have in place."
Many Facebook employees made millions from the company's $16-billion (12.6 billion euro) initial public offering (IPO) on May 18. But dozens of shareholders are suing the social network for losses they incurred in the aftermath of the company's lackluster debut. Facebook has lost a fifth, or $20 billion, in value from the IPO stock price of $38. Some 40 state and federal lawsuits have been filed against the company as a consequence.
Some of the suits claim that Facebook and its main underwriters - Morgan Stanley, JP Morgan and Goldman Sachs - only informed preferred clients about lowered profit forecasts prior to the IPO. The social network has been struggling to sustain its advertising revenue as many users move to mobile devices.
In a motion filed on Thursday, Facebook said that federal regulators do not require companies to include revenue or profit forecasts in IPO documents.
Facebook and its underwriters have blamed the IPO fiasco on technical glitches at the Nasdaq Stock Market. The glitches delayed trading by more than half an hour, leaving some investors unable to learn if their order had gone through for hours. Investors have sued the Nasdaq OMX Group for negligent handling of orders.
The Thursday motion by Facebook cited lawsuits "alleging that technical problems and other trading-related errors affecting Facebook's stock - which Nasdaq has subsequently admitted - created market uncertainty and caused investor losses."
slk/msh (AP, Reuters)