Facebook Inc and its chief executive Mark Zuckerberg have been sued in what could be the first of many lawsuits over a disappointing earnings announcement by the social media company that wiped out about US$120 billion (S$163.4 billion) of shareholder wealth.
The complaint filed by shareholder James Kacouris in Manhattan federal court on Friday accused Facebook, Mr 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.
Mr Kacouris said the marketplace was “shocked” when “the truth” began to emerge on Wednesday from the Menlo Park, California-based company.
Kacouris states the 19 percent drop in Facebook shares proceeding the earning announcement stemmed from federal securities law violations by the defendants. The sell-off wiped nearly $17 billion off Mark Zuckerberg’s net worth. It was the second time Facebook stock took such a tense plunge, following the first instance during the wake of the Cambridge Analytica data breach scandal.