Since its initial public offering in May 2012, Facebook’s stock has taken a significant hit. On May 17, 2012, the stock sold for $38 a share – now, just a few months later, is has declined to slightly over $19 per share.
Recently filed court documents reveal that North Carolina was a major investor in Facebook stock, originally purchasing 685,737 shares for the state’s pension fund. Since that time, the retirement system has lost approximately $4.1 million due to this stock purchase alone.
While North Carolina’s pension fund is valued at significantly more than the loss – $75.9 billion as of March 31, 2012 – the loss is still sizeable. The fund provides retirement benefits for around 850,000 state workers.
Recently, North Carolina’s retirement system joined a class action lawsuit against the underwriters of the IPO, such as Morgan Stanley and Goldman Sachs, and Facebook. The lawsuit claims the companies “misrepresented Facebook’s initial public stock offer.”
The lawsuit stems from a report that Morgan Stanley, the lead underwriter, informed some of its larger clients that one of its analysts was lowering his revenue forecasts for Facebook, shortly before the initial public offering, according to Reuters. The information was not distributed among the general public. The State Treasure responded, “Facebook and its underwriters told one thing to the public, but shared the real facts with only a few select investors on Wall Street. Our goal is to recover our pension fund’s financial damages.”
Although the state sold a small amount of its original stock purchase the following day, for a gain of around $215,000, the retirement system still holds approximately 618,000 shares of the stock.
Source: Equities.com, “North Carolina retirees lost at least $4.1 million on Facebook, state discloses,” John Frank, August 18, 2012.
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