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Facebook IPO Arbitration Claims Expected

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Investors who bought shares in Facebook’s IPO at or near the offering price of $38.00 are now looking at losses as the stock trades in the $20.00 range.

According to an article in the Wall Street Journal titled “Facebook’s Next Fight: Suits, and More Suits,” over 50 lawsuits have been filed against Facebook by angry investors. Many more shareholders are expected to file arbitration claims against the brokers and securities firms from whom they bought the Facebook stock.

Facebook reported the following legal outlook in its 10Q for the quarter ended June 30, 2012:

“Beginning on May 22, 2012, multiple putative class actions, derivative actions, and individual actions were filed in state and federal courts in the United States and in other jurisdictions against us, our directors, and/or certain of our officers alleging violation of securities laws or breach of fiduciary duties in connection with our IPO and seeking unspecified damages. We believe these lawsuits are without merit, and we are vigorously defending these lawsuits. In addition, following our IPO, the events surrounding our IPO became the subject of government inquiries, and we have received requests for information in connection with certain of those inquiries.”

Options typically available to investors with a securities-related dispute include discussions with the brokerage firm involved, arbitration through the Financial Industry Regulatory Authority (FINRA), or mediation.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

Nasdaq Glitches with Facebook IPO Result in Bad Trades

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Nasdaq OMX Group Inc. (NDAQ) is under fire from brokers and traders who lost money on Friday’s initial public offering of Facebook Inc.

Technical issues at the exchange caused orders placed between 11:11 a.m. and 11:30 a.m. on May 18th to go into a “black hole,” according to the Wall Street Journal. Other investors experienced difficulties when they tried to cancel IPO orders. Nasdaq indicates that it may earmark at least $13 million to resolve bad trades.

The Financial Industry Regulatory Authority, or Finra, is expected to oversee the process of arbitrating and distributing the money to investors. The U.S. Securities and Exchange Commission (SEC) is also expected to review the Facebook IPO trading activity.

Florida Securities Litigation and FINRA Arbitration

Contact Fort Lauderdale securities litigation attorney Howard N. Kahn, Esq. if you or someone you know has a securities dispute. In addition to being an experienced securities litigation attorney, Mr. Kahn also serves as a FINRA arbitrator for individual investors, brokers, and brokerage firms. You can reach him at 954-321-0176 or online.

Pre-IPO Facebook Fraud Halted in Miami

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Allen Weintraub, charged with an ongoing fraudulent scheme of selling securities of an investment vehicle that he falsely represented owned pre-IPO shares of Facebook, Inc., was the subject of an April 4, 2012 Order to Show Cause and Other Emergency Relief (“Order”) by the U.S. District Court for the Southern District of Florida in Miami.

The Court’s Order temporarily freezes the assets of Weintraub and certain shell companies through which he apparently operates. The order also directed Weintraub to demonstrate, among other things, why he should not be held in contempt for violating the Court’s Final Judgment in SEC v. Allen E. Weintraub and AWMS Acquisition, Inc., d/b/a Sterling Global Holdings, Case No. 11-21549-CIV-HUCK/BANDSTRA (S.D.Fla.), which was entered on January 10, 2012 (Final Judgment). The Final Judgment enjoined Weintraub from violating, among other things, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

The Commission’s motion for an order to show cause alleges that in February 2012, Weintraub, acting through an alias, William Lewis, and through entities named Private Stock Transfer, Inc., PST Investments III, Inc. (PST Investments), and World Financial Solutions, defrauded investors by selling them worthless shares in PST Investments. Weintraub had falsely represented that he would sell the investors pre-IPO shares of Facebook, Inc., and that PST Investments had an ownership interest in Facebook stock. The Commission’s motion also alleges that Weintraub was utilizing the website privatestocktransfer.com to perpetrate his scheme. The Court’s Order directed that this website be deactivated. The Division of Enforcement urges anyone who believes that Allen Weintraub may have recently defrauded them to contact John Rossetti, Senior Counsel, at 202-551-4819.

On December 30, 2011, the Court entered an order granting the Commission’s motion for summary judgment against Weintraub and his shell company, Sterling Global. In its Order, the Court found that Weintraub deceived the public by making false and misleading statements regarding Sterling Global’s ability to purchase and operate Eastman Kodak Company and AMR Corporation. The Court’s January 2012 Final Judgment permanently enjoined Weintraub and Sterling Global from future violations of Sections 10(b) and 14(e) of the Exchange Act and Rules 10b-5 and 14e-8 thereunder, and ordered them to each pay a civil money penalty in the amount of $200,000. See Litigation Release 22225 (January 11, 2012). [SEC v. Allen E. Weintraub and AWMS Acquisition, Inc., d/b/a Sterling Global Holdings, Case No. 11-21549-CIV-HUCK/BANDSTRA (S.D.Fla.)] (LR-22343)

Securities Litigation and FINRA Arbitration

Contact Fort Lauderdale securities litigation attorney Howard N. Kahn, Esq. if you or someone you know has a securities dispute. In addition to being an experienced securities litigation attorney, Mr. Kahn also serves as a FINRA arbitrator for individual investors, brokers, and brokerage firms. You can reach him at 954-321-0176 or online.

Facebook Pre-IPO Share Sales Draw SEC Scrutiny

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Managers of private investment funds established solely to acquire the shares of Facebook and other Silicon Valley firms were charged by the Securities and Exchange Commission with misleading investors and pocketing undisclosed fees and commissions. The SEC alleges that the fund managers collectively raised more than $70 million from investors.

Separately, the SEC charged SharesPost, an online service that matches buyers and sellers of pre-IPO stock, with engaging in securities transactions without registering as a broker-dealer.

The charges stem from the SEC’s yearlong investigation of the fast-growing business of trading pre-IPO shares on the secondary market.

“While we applaud innovation in the capital markets, new platforms and products must obey the rules and ensure the basic fairness and disclosure that are the hallmarks of sound financial regulation,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.

“Fund managers must fully disclose their compensation and material conflicts of interest.  Investors deserve better than the kind of undisclosed self-dealing present in these cases,” said Robert Kaplan, Co-Chief of the SEC Enforcement Division’s Asset Management Unit.

Contact Fort Lauderdale securities litigation attorney Howard N. Kahn, Esq. if you or someone you know has been the victim of securities fraud. Mr. Kahn is an experienced securities fraud and litigation attorney. He is also a FINRA arbitrator in securities disputes among individual investors, brokers, and brokerage firms. You can reach him at 954-321-0176 or online.