Shareholders who participated in Facebook’s (NASDAQ: FB) IPO won a
victory on December 11, 2013, when Judge Sweet of the Southern District
of New York rejected NASDAQ’s (NASDAQ: NDAQ) motion to dismiss a class
action lawsuit alleging NASDAQ negligently failed to properly test and
design its systems. The suit claims that NASDAQ’s negligence
significantly damaged certain shareholders who purchased or sold shares
in the IPO, and seeks compensation for those shareholders. Washington
D.C. law firm Finkelstein Thompson LLP, along with New York law firm
Lovell Stewart Halebian Jacobson LLP, serve as co-lead counsel for the
negligence claims in the consolidated Facebook litigation. Judge Sweet's
opinion is here.
Judge Sweet also denied NASDAQ’s motion to dismiss federal securities
claims based on the same events.
While NASDAQ claimed it enjoyed absolute immunity from liability for its
purportedly “regulatory” actions in connection with the IPO, the Court
stated that NASDAQ “represents no one but itself when it entices
investors to trade on its exchange.” The Court found that permitting
immunity would “allow unrestrained motives for profit to go unchecked,”
and that exchanges could not escape liability for failures to “exercise
due care in their pursuits of profit.”
The Court also granted the Plaintiffs’ motion for leave to amend their
complaint, noting the Securities and Exchange Commission’s issuance of
an order containing “new factual findings, released one month after
Plaintiffs filed their complaint, which are directly relevant to and
support of Plaintiffs’ claims.” The decision acknowledges the dramatic
shift over time in the nature of securities exchanges, which have
evolved from non-profit mutual associations owned by their members to
for-profit corporations, and recognizes the critical role private
litigation plays in ensuring exchanges conduct themselves appropriately,
and in providing remedies to shareholders when they do not.
To learn more about Finkelstein Thompson LLP, please visit our website
at www.finkelsteinthompson.com
or call our Washington, D.C. office at (877)-337-1050.
To learn more about Lovell Stewart Halebian Jacobson LLP, please visit
our website at www.lshllp.com
or call our New York City office at (212)-608-1900.
Copyright Business Wire 2013