If you had a big stake in the Facebook IPO, you"ve got plenty of reasons to be a little upset about how things have been going since then. A new class action lawsuit takes things a step further by suing Mark Zuckerberg, claiming that the Facebook founder used insider knowledge to unload on $1 billion worth of massively overvalued stock.
The lawsuit says that Zuckerberg and Facebook"s management knew that the site couldn"t draw in enough advertising revenues to support the stock"s $38 IPO share price, and that Morgan Stanley, JPMorgan, and Goldman Sachs all warned them about it.
Rather than doing the upstanding thing and taking action, Zuckerberg decided to dump a large portion of shares while the prices were still good. Only a select few "major" investors were actually informed about the overvaluation.
Still, it could be worse - Zuckerberg hasn"t faced any criminal charges so far, so he doesn"t have to worry about any of the stiff penalties involved with insider trading. Yet.
Source: TMZ