One of the many court cases involving Facebook’s troubled initial public offering was dismissed Wednesday, as a U.S. District Court in Texas ruled that sufficient grounds were not presented to file a lawsuit.
TechCrunch reported that U.S. District Judge for Western Texas Lee Yeakel ruled that a petition filed by Bogdan Rentea & Associates did not meet the requirements of rule 27, which covers requests for depositions from defendants and document discovery.
The petition was based on news stories about the IPO, and TechCrunch reported that it sought to bring in for questioning Facebook Co-Founder and Chief Executive Officer Mark Zuckerberg, Chief Financial Officer David Ebersman, Chief Accounting Officer David Spillane, and representatives from underwriters Morgan Stanley, J.P. Morgan, and Goldman Sachs.
The theme of the questioning, according to TechCrunch, was to gather information on whether negative financial data about the social network was withheld from the public in the days prior to the ill-fated IPO, with the plaintiffs specifying these four questions:
- Did Facebook fail to make public negative information given to its underwriters?
- Did the banks only disclose that information to some investors?
- Did the defendants seek to artificially increase the price of the offering for their own benefit?
- Why was the $38 IPO price selected?
Facebook offered its reaction to Wednesday’s ruling in a statement to TechCrunch:
We are pleased with the court’s decision. As we’ve said before, we believe the cases filed against us in connection with the IPO are without merit, and we will continue to defend ourselves vigorously.
Has any defendant ever not vowed to defend themselves vigorously? Still, as pointed out by TechCrunch, it is important to note that this case was dismissed due to a violation of court procedure, and not over whether the defendants were innocent or guilty.
Readers: Do you think lawsuit attempts of this sort against Facebook and its executives and underwriters have any chance of succeeding?
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