A US litigation firm has been instructed to sue Facebook and its founder Mark Zuckerberg over the social network site’s public flotation.
Robbins Geller Rudman & Dowd founding member and partner Samuel Rudman is representing a group of investors and has filed a class-action law suit claiming they have lost up to a fifth of their money since Friday’s $16bn stock market listing.
The claims accuses Facebook and its banks, including underwriter Morgan Stanley, of concealing the company’s expected drop in revenue.
It meant that investors may have potentially paid too much for shares at the flotation price of $38 each.
Rudman is also the lawyer instructed on a class action claim against JPMorgan Chase for its $2bn loss on a derivatives trade.
The value of Facebook was $104bn (£66bn) when shares opened, but is now just $85bn. The shares closed yesterday at $32.
Zuckerberg, his chief finance officer David Ebersman and Facebook itself, are facing legal action. One investor is also suing the NASDAQ, the stock exchange that hosts Facebook’s shares.
A spokesman for Facebook would not reveal if the company had instructed external counsel. A statement said: “We believe the lawsuit is without merit and will defend ourselves vigorously.”