SEC Completed Facebook IPO Inquiry in May; No Enforcement Action Recommended

SECLogo650The Securities and Exchange Commission notified Facebook in May that its inquiry into the company’s initial public offering was complete, and no enforcement action would be taken, the social network reported last week in its Form 10-Q filing with the SEC.

Facebook wrote in its Form 10-Q:

Beginning May 22, 2012, multiple putative class actions, derivative actions and individual actions were filed in state and federal courts in the U.S. and in other jurisdictions against us, our directors and/or certain of our officers alleging violation of securities laws or breach of fiduciary duties in connection with our initial public offering and seeking unspecified damages. We believe these lawsuits are without merit, and we intend to continue to vigorously defend them.

The vast majority of the cases in the U.S., along with multiple cases filed against Nasdaq OMX Group and Nasdaq alleging technical and other trading-related errors by Nasdaq in connection with our IPO, were ordered centralized for coordinated or consolidated pre-trial proceedings in the U.S. District Court for the Southern District of New York.

In a series of rulings in 2013 and 2014, the court denied our motion to dismiss the consolidated securities class action and granted our motions to dismiss the derivative actions against our directors and certain of our officers. The plaintiffs in four of these derivative actions have filed notices of appeal.

In addition, the events surrounding our IPO became the subject of various state and federal government inquiries. In May 2014, the Securities and Exchange Commission notified us that it had terminated its inquiry and that no enforcement action had been recommended by the SEC.

Readers: Was the SEC correct?

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