Facebook and its CEO Mark Zuckerberg have reached a USD 35 million settlement of a class-action lawsuit accusing them of hiding worries about the social media company’s growth prior to its May 2012 initial public offering. The settlement was filed in the federal court in Manhattan and won preliminary approval from the district judge, Reuters reports.
Shareholders led by the Arkansas Teacher Retirement System and Fresno County Employees’ Retirement Association in California accused Facebook of concealing internal concerns about how growth in mobile devices might reduce revenue, even as it quietly warned its banks to cut their forecasts. The settlement resolves claims against Facebook, officials including COO Sheryl Sandberg and director Peter Thiel, and bank underwriters covering a five-day period surrounding the USD 16 billion IPO.
A hearing is planned for September to consider final settlement approval. The accord was reached after mediation, and provides an average recovery of about 11 cents per share, or 7 cents per share after possible legal fees and costs, court papers show. Insurers may cover some of the payout.
