Facebook and CEO Mark Zuckerberg were sued on Friday in what could be the first of many lawsuits over a hugely disappointing earnings announcement by the social media company that wiped out about $120 billion of shareholder wealth, Reuters has reported.
The complaint filed by shareholder James Kacouris in the Manhattan federal court accused Facebook, Zuckerberg and Chief Financial Officer David Wehner of making misleading statements about or failing to disclose slowing revenue growth, falling operating margins, and declines in active users.
Kacouris said the marketplace was “shocked” when “the truth” began to emerge on Wednesday from the Menlo Park, California-based company. He said the 19 percent plunge in Facebook shares the next day stemmed from federal securities law violations by the defendants.
The lawsuit seeks class-action status and unspecified damages. A Facebook spokeswoman declined to comment.
Shareholders often sue companies in the United States after unexpected stock price declines, especially if the loss of wealth is large.
Facebook has faced dozens of lawsuits over its handling of user data in a scandal also concerning the U.K. firm Cambridge Analytica. Many have been consolidated in the federal court in San Francisco.
