U.S. judges to decide venue for Facebook lawsuits

Wed Sep 19, 2012 2:04pm EDT
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By Tom Hals and Basil Katz

(Reuters) - Before Facebook Inc investors can pursue their court fight over the social network's problematic stock market debut, a panel of federal judges must decide whether to put the cases under one roof and, if so, where.

The Judicial Panel on Multidistrict Litigation is due to hear arguments in Manhattan federal court on Thursday over how several dozen investor and shareholder lawsuits can proceed.

The cases are widely expected to go to a judge in New York, although some investors whose cases are in California want the litigation to remain in San Francisco, near Facebook's home turf, for easy access to witnesses and documents.

A few cases were also filed in federal courts in Florida and the District of Columbia, and in California state court.

Investors sued Facebook after its May 18 initial public offering, which was marred by technical glitches at the NASDAQ exchange and accusations that the company selectively disclosed unflattering information about its business prospects to privileged investors.

The lawsuits, which are seeking unspecified damages, could cost Facebook millions of dollars to defend, as it strives to put the disastrous IPO behind it.

Facebook's stock tumbled as much as 50 percent after its debut at $38 per share. It was trading at $22.63 in early afternoon on Wednesday.

In at least 33 lawsuits seeking class action status, investors have asked courts to hold the company and its underwriters responsible for causing their losses.   Continued...

Facebook website pages opened in an internet browser are seen in this photo illustration taken in Lavigny May 16, 2012. REUTERS/Valentin Flauraud