Facebook IPO Lawsuit

8/13/2019 Facebook IPO Lawsuit

1/83

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK

------ ---------x

IN RE FACEBOOK, INC., IPO SECURITIES ANDDERIVATIVE LITIGATION, OPINION ORDER

MOL No. 12-2389

- - - - - -- - - - - - - - - - - - - - - - - - - - - - - - -X

A P P E A R A N C E S:

A t to r n e f o r Co-Lead P l a i n t i f f s and t h e C la s s

BERNSTEIN LITOWITZ BERGER GROSSMAN LLP1285 Avenue o f t h e Amer icasNew York, NY 10019By: Max W. Berge r, Esq .

S t e v e n B. S in g e r, Esq .John J . R i z i o - H a m i l t o n , Esq .C a t h e r i n e E. McCaw, Esq .

LABATON SUCHAROW LLP

140 BroadwayNew York, NY 10005By: Thomas A. Dubbs, Esq .

James W. Jo h n so n , Esq .Lo u i s G o t t l i e b Esq .Thomas G. Hoffman, J r . Esq .

A d d i t i o n a l Counse l f o r Co-Lead P l a i n t i f fBanyan C a p i t a l Maste r Fund

KESSLER TOPAZ MELTZER CHECK LLP280 King o f P r u s s i a RoadRadnor, P e n n s y l v a n i a 19087By: David K e s s l e r Esq.

Dar r en J . Check, Esq.

Case 1:12-md-02389-RWS Document 172 Filed 12/12/13 Page 1 of 83


2/83

A d d i t i o n a l C o u n se l f o r Named P l a i n t i f f sJ o s e G, G a lv a n a n d Mar J a n e Lu l e G alv an

LIEFF CABRASER HEIMANN & BERNSTEIN250 Hudson S t r e e t 8 t h F l o o r

New York, NY 10013By: S t e v e n E. Fineman, Esq .

D a n i e l P. C h i p l o c k , Esq.

A t t o r n e y s f o r Fa c e b oo k , I n c . a ndI n d i v i d u a l Facebook D e f e n d a n t s

KIRLAND & ELLIS LLP601 L e x i n g t o n AvenueNew York, NY 10022By: Andrew B. Clubok , E sq .

B r a n tW

Bi shop , E sq .

KIRLAND & ELLIS LLP655 f t e e n t h S t . W

Wash in g to n , DC 20005By: S u san E. Enge l , Esq.

K e l l e n S. Dwyer, Esq.Bob A l l e n Esq.

WILLKIE FARR & GALLAGHER LLP787 S e v e n t h AvenueNew York , NY 10019By: Ta r i q Mundiya , E sq .

Todd G. C o sen za , Esq.Sameer Advani ,

WILLKIE FARR & GALLAGHER LLP1875 K S t r e e t W

Washing ton , DC 20006By: Ri r d D. B e r n s t e i n E sq .

E l i J . Bower, E sq .

A t t o r n e f o r Underwr r D e f e n d a n t s

DAVIS POLK & WARDWELL LLP450 L ex i o n Ave nu eNew York, NY 10017By: James P. Rouhandeh, E sq .

Cha s S . D ug ga n, E sq .Andrew D i t c h f i e l d Esq.

2



3/83

Sweet D J

su r s u a n t t o t h e t r a n s r o r d e r f rom t h e U n i t e d

1 Pane l on Mu l t i d i s t r i c t L i t i g a t i o n ( t h e MDL P a n e l ) ,

e n t e on Octo b er 4, 2012, 41 a c t i o n s s temming f rom t h e May 18,

2012 t i a l p u b l i c o f f e r i n g ( IPO ) o f Facebook , I n c .

( k o r t h e Company ) a r e s e n t l y t h i s C o u r t .

The i n s t a n t m ot i on r e l a t e s t o P l a i n t i f f s N o r th

Caro l Depar tment o f S t a t e T r e a s u r e r on b e h a l f o f t h e N o r th

Caro l R e t i r e m e n t Sys t em s ; Banyan C a p i t a l M a s t e r Fund L t d . ;

Ar kansas Teache r R e t i r e m e n t S and t h e Fr esno County

Empl s ' R e t i r e m e n t A s s o c i a t i o n ; and t h e Named P l a i n t i f

Jo se G . Galvan and Mary Jan e Lule Galvan ( c o l l e c t i v e l y, Lead

P l a i n t i f o r P l a i n t i f f s ) c o n s o l i c l a s s a c t c o m p l a i n t

( t h e " i d a t e d s s A c t i o n Comp i n t o r CAC ) a l l e g i n g

f e d e r a l s e c u r i t i e s c I a ( the S e c u r i t i e s A c t i o n s ) a g a i n s t t h e

Def endan t s Facebook , c e r t a i n Facebook d i r e c t o r s o f f i c e r s

( the " d u a l D e f e n d a n t s ) , 1 and u n d e r w r i t e r s o f i n i t i a l

p u b l i c o f f e r i n g ( IPO ) o f Facebook ( the " r w r i t e r

The I n d i v i d u a l Defendan t s i n c l u d e Mark Zuc ( Zuckerbe rg ) ; K.Sandberg ( ) ; David A. Ebersman ( Ebersman ) ; David M. l a n e( S p i l l a n e ) ; Marc L. Andreessen ( Andreessen n ; E r sk in e B. Bowles( Bowles ) ; James B. B rey er ( ) ; Donald E. Graham ( Graham ); ReedHast ings ( Ha n); and P e t e r A. T h ie l ( Th i e l n ) .

3



4/83

Defen d an t s ) 2 ( c o l l e c t i v e l y , D e f e n d a n t s o r F aceb o o k

Defen d an t s ) . The Defen d an t s have moved t o d i s m i s s t h e C l a s s

A c t i o n Compla in t p u r s u a n t t o F e d e r a l Rul es o f Ci v i 1 Pro ced u re

12 (b) (6) f o r f a i l u r e t o s t a t e a c l a i m . Based on t h e c o n c l u s i o n s

s e t f o r t h below, D e f e n d a n t s ' m ot i on t o d i s m i s s i s d e n i e d .

I r i o r ro ceed in g s

OnS ep tem b er 20, 2012 , t h e

MOLPan e l h e l d

ah e a r i n g t o

de te rmine wh eth er t h e p e n d i n g 41 f i l e d a c t i o n s s h o u l d b e

t r a n s f e r r e d t o t h e S o u t h e r n D i s t r i c t o f New York. On O c t o b e r 4,

2012, t h e MOL Pan e l i s s u e d a t r a n s f e r o r d e r , f i n d i n g t h a t t h e

S o u t h e r n D i s t r i c t o f New York i s an a p p r o p r i a t e t r a n s f e r e e

d i s t r i c t f o r p r e t r i a l p r o c e e d i n g s i n t h i s l i t i g a t i o n , r e a s o n i n g

t h a t [m]uch o f t h e r e l e v a n t d i s c o v e r y w i l l be l o c a t e d i n New

York In r e Facebook . IPO Secs . & D e r i v a t i v e L i t i g . ,

MOL No. 2389, 2012 WL 4748325, a t *3 (Oct . 4, 2 0 1 2 ) . The c a s e s

The U n d e r w r i t e r D e f e n d a n t s i n c l u d e Morgan S t a n l e y & Co. LLC ( MorganS t a n l e y ) ; J . P. Morgan S e c u r i t i e s LLC ( J . P. M o rg a n ) ; Goldman, Sachs & Co.( Goldman S a c h s ) ; A l l e n & Company LLC; B a r c l a y s C a p i t a l I n c . ; B l a y l o c k

R o b e r t Van LLC; BMO C a p i t a l M a r k e t s C o r p . ; C.L . King & A s s o c i a t e s , I n c . ;C a b r e r a C a p i t a l M a r k e t s , LLC; C a s t l e O a k S e c u r i t i e s , L. P. ; C i t i g r o u p G l o b a l

M a r k e t s , I n c . ; Cowen a n d Company, LLC; C r e d i t S u i s s e S e c u r i t i e s (USA) LLC;D e u t s c h e Bank S e c u r i t i e s I n c . ; E*TRADE S e c u r i t i e s LLC; I t a u BB USS e c u r i t i e s , I n c . ; L a z a r d C a p i t a l M a r k e t s LLC; L e b e n t h a l & C o . , LLC; LoopC a p i t a l M a r k e t s LLC; M.R. B e a l & Company; M a c q u a r i e C a p i t a l (USA) I n c . ;M e r r i l l Lynch, P i e r c e , F e n n e r & S m i t h I n c o r p o r a t e d ; M u r i e l S i e b e r t & C o . ,I n c . ; O p p en h e imer & Co. I n c . ; P a c i f i c C r e s t S e c u r i t i e s LLC; P i p e r J a f f r a y &C o . ; Raymond J a me s & A s s o c i a t e s , I n c . ; RBC C a p i t a l M a r k e t s , LLC; Samuel A.Ramirez & Company, I n c . ; S t i f e l , N i c o l a u s & Company, I n c o r p o r a t e d ; We l l sF a rg o S e c u r i t i e s , LLC; The W i l l i a m s C a p i t a l Group , L. P; an d W i l l i a m B l a i r &Company, L . L . C .

4



5/83

were a s s i g n e d t o t h i s Co u r t f o r c o o r d i n a t i o n o r c o n s o l i d a t i o n o f

t h e p r e t r i a l p r o c e e d in g s . I d .

Of t h e 41 a c t i o n s p r e s e n t l y b e f o r e t h e C o u r t due t o

t h e MOL P a n e l ' s t r a n s f e r o r d e r , 30 o f t h e s e a c t i o n s a l l e g e

v i o l a t i o n s o f t h e S e c u r i t i e s Act o f 1933 ( the S e c u r i t s Act )

and t h e S e c u r i t i e s Exchange Act o f 1934 ( the Exchange Act )

a g a i n s t movants and v a r i o u s u n d e r w r i t e r de s . On December

6, 2012, t h i s Co u r t i s s u e d an o p in io n , In r e Facebook. IPOSec

D e r i v a t i ve L i t 288 F.R.D. 26 (S .D.N.Y. 2012) ( the

December 6, 2012 O p in io n ) , which con i d a t e d t h e a c t i o n s

a I l e ng v i o l a t i o n s o f t h e S e c u r i t i e s Act and Exchange Act i n t o

t h e S e c u r i t i e s A c t i o n s and Lead P l a i n t i f f s were a p p o in t e d . 3 The

3 The S e c u r i t i e s A c t i o n s i n c l u d e :No. 1 2 - c v - 4 0 8 1 ( f i l e d 5 / 2 3 / 1 2 ) ;

( f i l e d 5 / 2 3 / 1 2 ) ;

I n c . No. 1 2 - c v - 4 1 5 0 ( f i l e d ~ ~ ~ ~ ~ ~ ~ F ~ a ~ c e ~ = b ~ o ~ o ~ k fI n c . , No.4157 ( f i l e d 5 / 2 4 / 1 2 ) ; No. 1 2 - c v - 4 1 8 4 ( f i l e d5 / 2 5 / 1 2 ) ; 1 2 - c v - 4 1 9 4 ( f i l e d 5 / 2 5 / 1 2 ) ;

5 / 3 0 / 1 2 ) ;

Ins:...:.. No.4332 ( f i l e d6 / 4 / 1 2 ) ;

No.

Se x t o n v . Facebook , No. 1 2 - c v - 4 7 7 7 ( f i l e dv I n c No. 1 2 - c v - 5 5 11 ( f i l e d 7 / 1 7 / 1 2 ) , whichwere f i l e d i n t h i s D i s t r i c t . The S e c u r i t i e s A c t i o n s a l s o i n c l u d e :

1 2 c v 2 6 6 2 i 1 2 - c v - 2 6 8 0 ;No. 1 2 - c v - 2 1 2

No.No. i n

t h e N o r t h e r n D i s t r i c t C a l i f o r n i a and t r a n s f e r r e d t o t h i s D i s t r i c t . I n

5



6/83

c l a s s a c t i o n s a g a i n s t t h e NASDAQ O X Group Inc . and The NASDAQ

Stock Market LLC ( co l c t i v e l y NASDAQ a l l e g i n g f e d e r a l

s e c u r i t i e s ( the NASDAQ S e c u r i t i e s Act ions l and n e g l i g e n c e

c la ims ( the NASDAQ Negl igence Act ions ) c o l l e c t i v e l y, t h e

NASDAQ Act ions ) were a l s o c o n s o l i d a t e d . The c a s e s a l l e g i n g

v a t i ve c ims ( the D er i v a t i ve Act ions ) a r e c u r r e n t l y no t

c o n s o l i d a t e d , with i n d i v i d u a l p l a i n t i f f s i n t h e D e r i v a t i v e

Act ions hav ing brough t f o r t h s e p a r a t e a c t i o n s .

Lead Pla i f f o r t h e S e c u r i t s Act ions f i l e d

C o n so l i d a t e d C l a s s Act ion Complain t on Februa ry 28, 2013. The

CAC a l l e g e s v i o l a t i o n s o f S e c t i o n s 11, 12 (a) (2) and 15 o f t h e

S e c u r i t i e s Act .

The Defendants f i l e d t i n s t a n t mo t io n t o d i s mi s s t h e

S e c u r i t i e s Act s on A p r i l 30, 2013. Ora l arguments were h e l d ,

and t h e mo t io n was marked f u l l y su b m i t t e d , on Octobe r 8, 2013.

I I ~ l e g t i o n so f t h e C o n s o l i d a t e d Class c t i o n Compla in t

Alleged c t s and p r i o r p r o c e e d i n g s u n d e r l y i n g t h i s

a d d i t i o n , a c t i o n s p l a i n t i f f s Lawrence Corneck and Eugene S t r i c k e r u n d e rEx ch an g e Act i n c l u d e :

6



7/83

opin ion a re s e t ou t t h e December 6, 2012 Opin ion .

Accord ing ly, on ly f a c t s r e l e v a n t t o t h i s mo t io n w i l l be p r o v id e d

below. Because t h i s i s a motion t o d i sm i s s under Fed. R. Civ.

P. 12 (b) (6 ) , t h e lowing c t s , which t h i s Cour t assumes t o be

t r u e , a r e drawn from CAC. See Te l l a b s , Inc . v. Makor I s s u e s

551 U.S. 308, 322, 127 S. Ct. 2499, 168 1 . Ed.

2d 179 (2007) ( [FJaced wi th a Rule 1 2 ( b ) ( 6 ) motion t o d i sm i s s a

10(b) a c t c o u r t s must , a s w i th any motion t o s s f o r

f a i l u r e t o p l e a c l a im on which r e l i e f can g ra n t e d , accep t

a l l f a c t u a l a l l e g a t i o n s i n t h e compla in t as t r u e . ) .

The CAC r e f e r s t o t h e e v e n t s su r r o u n d i n g and a s i n g

ou t o f Facebook ' s May 18, 2012 IPO.4 Facebook i s a worldw

o n l i n e s o c i a l ne twork ing company t h a t ( i ) b u i l d s t o o l s t h a t

enab le u s e r s t o connec t , s h a re , d i s c o v e r and communicate with

each o t h e r ; ( i i ) e n a b l e s deve l r s t o b u i l d s o c i a l a p p l i c a t i o n s

o f Facebook o r t o i n t e g r a t e t h e i r websi t e s w i th Facebook; and

( i i i ) o f f e r s p r o d u c t s t h a t e n a b l e r t i s e r s m a r k e t e r s t o

engage with i t s u s e r s . Facebook i s c u r r e n t l y t h e w o r l d ' s

l a s t s o c i a l network. CAC ]I 84.) As o f March 31, 2012,

Facebook r e p o r t e d t h a t 901 I l i o n a c t i v e u s e r s a c c e s se d s

websi t e each month, n e a r l y h a l f t h e peop le who use t h e I n t e r n e t

I n f o r m a t io n from S e c u r i t i e s and Exchange Commission ( SEC ) f i l byFacebook, i n p a r t i c u l a r i t s Form S - l R e g i s t r a t i o n S t a t em en t and amended FormS - l / A R e g i s t r a t i o n Sta t e m e n t s a r e no t ed where r e l e v a n t .

7



8/83

and a p p r o x im a te ly 13 o f t h e w o r l d s p o p u l a t i o n .

Facebook g e n e r a l l y does no t charge i t s u s e r s r any o f t h e

s o c i a l ne twork ing s e r v i c e s t p ro v i d e s . I n s t e a d , Facebook ' s

b u s i n e s s model depe a lmos t e n t i r e l y on s e l l i n g ce on i t s

network t o companies t h a t want t o Facebook ' s u s e r base

a d v e r t i s e m e n t s d i ayed t o Facebook members. The Company 's

a d v e r t i s i n g revenue accoun ted 98%, 95 and 85 o f t h e

Company's revenues i n 2009, 2010, and 2011 r e s p e c t i v e l y . Id .

J[ 9 1 .

In 2011, Facebook began t o e x p l o re engag ing an IPO

t o compete wi o t h e r r i v a l c a s h - r i c h t echno logy companies . The

Company 's s h a re s were t r a d e d on p r i v a t e exchanges , b u t a c c e s s i n g

t h e p u b l i c marke t s th rough an IPO would p r o v i d e t h e Company w i th

l a r g e amounts o f ca c r e a t e a h i g h l y l i q u i d market fo r i t s

s t o c k and had t h e p o t e n t i a l t o s i g n i f i c a n t l y i n c r e a s e t h e

Company's v a l u e , among o t r b e n e f i t s . ( Id . J[ 85 . )

On Februa ry I , 2012, Facebook p u b l i c l y f i l e d s

i t i a l r e g i s t r a t i o n s t a t e me n t with t h e ( the Feb . 1

i s t r a t i o n S t a t e me n t ) . 6 (CAC J[ 89 . ) The i s t r a t i o n

5 Al l o f Facebook ' s Form S-1 D is c los u res , i n c l u d i n g amenQ'11ents, and t h e SEC'sd e c l a r a t i o n o f e f f e c t i v e n e s s a re s ea rchab le on t h e SEC's EDGAR s ea rch

a t fo rm a t h t t p : / / w w w. s e c . g o v / e d g a r / .h tm.

6 Facebook su b se q u e n t ly amended i t s i on s t a t e m e n t s e v e r a l t i m esbefo re f i t h e i r f i n a l Form S - l /A on May 16, 2012 ( t h e on

8

http://www.sec.gov/edgarhttp://www.sec.gov/edgar


9/83

a tement c o n t a i n e d h i s t o r i c a l d a t a a b o u t F a c e b o o k ' s per fo rmance

and a d e s c r i p t i o n o f r i s k s a s s o c i a t e d w i th t h e company. I t

s t a t e d t h a t , [ s ] i n c e J a nua r y 2011, Facebook. com has been t h e

number one w e bs i t e wor ldwide , w i th more t h a n 845 m i l l i o n

monthly a c t i v e u s e r s a s o f December 31, 2011, who c o l l e c t i v e l y

sp e n t on a v e ra g e 119.7 b i l l i o n mi n u t e s p e r y on Facebook.

Feb. R e g i s t r a t i o n S ta t e me n t , a t 7 9 . I t f u r t h e r s t a t t h a t

t h e Company has c o n s i s t e n t l y e x p e r i e n c e d r a p i d growth i n

number o f u s e r s and t h e i r engagement . I d . , a t 1 . Facebook ' s

a d v e r t i s i n g and t o t a l revenue grew from a pp r ox ima te ly $153

m i l l i o n t o $3 .2 b i l l i o n f rom 2007 t o 2011, a g rowth o f more t h a n

twen ty t imes i n f ou r y e a r s . CAC 92.) During t h i s t ime

p e r i o d , Facebook ' s annua l revenue grew from $153 m i l l i o n t o more

t h a n $3 .7 b i l l i o n .

Facebook a s c r i b e d i t s f i n a n c i a l r e s u l t s t o seve

f a c t o r s . The r s t and p r i n c i p a l f a c t o r was t h e growing usage

o f Facebook on mobi l e d e v i c e s , a s oppos t o t h e use o f Facebook

th rough t t i o n a l , s t a t i o n a r y de sk top computers . CAC 95 . )

A second f a c t o r was t h e Company ' s p r o duc t d e c i s i o n s , d e c i s i o n s

Facebook made c onc e r n ing t h e des and f e a t u r e s o f i t s w eb s i t e ,

t h e t y p e o f a d v e r t i s i n g t d i s p l a y e d and t h e p r i c e o f t h e

a d v e r t i s e m e n t s . CAC 96 . )

S ta temen t )

9



10/83

The usage o f Facebook on mo b i l e d e v i c e s was c r i t i c a l

t o Facebook ' s n a n c i a l p er fo rman ce f o r s e v e r a l r e a s o n s . F i r s t ,

Faceb o o k ' s m obi l e m ar ke t was e x t r e m e l y l a r g e : a p p r o x i m a t e l y h a l f

o f Facebook s m ont h l y u s e r s a c c e s s e d t h e w e b s i t e t h rough t h e i r

m obi l e d e v i c e s , e i t h e r a s supp l em en t t o r u se o f Facebook

t h ro u g h des op com pu t e r s o r as t h e i r o n l y means o f a c c e s s i n g

Facebook . Second , t h e Company's m obi l e u s e r s were growing more

r a p i d l y t h a n r e s t o f t h e Company's u s e r b a s e . Facebook

a n t i c i p a t e d t h e growth r a t e o f i t s mo b i l e u s e r s t o ex ceed

g ro w th r a t e o f t h e i r o v e r a l l member b a s e f o r t h e f o r e s e e a b l e

f u t u r e . T h i r d , w h i l e Facebook showed l a r g e volumes o f

a d v e r t i s i n g t o u s e r s who a c c e s s e d i t s w e b s i t e t h r o u g h d e s k t o p

com pu t e r s , t d n o t y e t show a d v e r t i s i n g t o i t s mo b i l e u s e r s .

Mobi u s e r s were , a t t h a t t ime , an unm one t i zed r e s o u r c e and an

i m p o r t a n t f a c t o r Faceb o o k ' s f u t u r e gr owt h . CAC ]( 9 4 . ) The

Feb. s t r a t i o n Sta temen t em phas i zed t h a t t h e mo b i l e m ar ke t

was c r i t i c a l a r e a o f "g r owt h" and s i g n i f i c a n t

o p p o r tu n i t y t h a t t h e Company was a c t i v e l y d e v e l o p i n g p r o d u c t s

t o t a l i z e on. Feb. R e g i s t r a t i o n S t a t e m e n t , a t 4

The Feb. R e g i s t r a t i o n S t a t e m e n t a l s o i n c l u d e d

war n i ngs o f r i s k f a c t o r s t o p o t e n t i a l i n v e s t o r s . T h ese war n i ngs

i n c lu d e d spe f i c d i s c l o s u r e s on t h e imp ac t o f m o b i l e u s and

10



11/83

t h a t Facebook 's l i t y t o t a p i n t o s p o t e n t i a l revenue

s t r eam cou ld an e f f e c t on t h e Company 's r evenues :

Growth i n use o f Facebook th rough our mobile p ro d u c t s ,where we do no t c u r r e n t l y d i s p l a y as a s u b s t i t u t efo r use on so n a l co mp u te r s may l y a f f e c t ourrevenue and f i n a n c i a l r e s u l t s . 1 R e g i s t r a t i o nS ta t e m e n t , a t 5.

Our a d v e r t i s i cou ld be a d v e r s e l y a f c t e d by anumber o f r i n c l u d i n g : r e a s e d u s e r

a c c e s s t o and with Facebook th rough our mobilep ro d u c t s , where we do no t c u r r e n t l y r e c t l y g e n e ra t emeaningfu l revenue , p a r t i c u l a r l y t o e x t e n t t h a tmobile engagement i s s u b s t i t u t e d fo r e withFacebook on p e r s o n a l computers where we monet ize u sag e byd i s p l a y i n g ads and o t h e r commercia l c o n t e n t . " Feb. 1R e g i s t r a t i o n S ta t e m e n t , a t 12; accord s t r a t i o nS ta t e m e n t , a t 13.

We had more t h a n 425 m i l l i o n MADs [month ly a c t users ]who used Facebook mobi p r o d u c t s in December 2011. Wea n t i c i p a t e t h a t r a t e o f growth i n mobile u s e r s w i l lc o n t i n u e t o exceed growth r a t e o f our o v e r a l l MAUsfo r t h e fo re s e e a b l e i n p a r t due t o our s ondeve lop ing mobile p t o encourage mobi le us o fFacebook. Although s u b s t a n t i a l m a j o r i t y o f ourmobi le u s e r s a l s o a c c e s s and engage wi t h Fa k onp e r s o n a l computers where we d i s p l a y a d v e r t i s iu s e r s cou ld d e c i d e to a s i n g l y a c c e s s our sp r i m a r i l y th rough mobile c e s . We do not c u r r e n t l yd i r e c t l y g e n e ra t e any meaningfu l revenue from t h e use o fFacebook mobile p ro d u c t s , and our a b i l i t y t o sos u c c e s s f u l l y i s u n p ro v en . Accord ing ly, i u s e r s c o n t i n u et o i n c r e a s i n g l y a c c e s s k mobile p ro d u c t s as as t i t u t e f o r a c c e s s p e r s o n a l compute rs , iwe a r e unab le t o l l y implement mo n e t i z a t i o ns t i e s fo r our u s e r s , our revenue andf i a l r e s u l t s may i v e l y a f f e c t e d . 1

i s t r a t i o n S ta t e m e n t , a t 13; acco rd R e g i s t r a t i o n

11



12/83

S t a t e m e n t , a t 14 .

We b e l i e v e t h a t o u r a b i l i t y t o compete e f i v e l y

d ep en d s upon o u r a b i l i t y t o s u c c e s s f u l l y m o n e t i z em obi l e u s a g e . Feb. 1 R e g i s t r a t S t a t e m e n t , a t 14a c c o r d R e g i s t r a t i o n S t a t e m e n t , a t 1 5 - 1 6 .

We do n o t c u r r e n t l y d i s p l a y ads t o u s e r s who a c c e s sFa c e boo k v i a mobi apps o r o u r m o b i l e w e b s i t e . To t h ee x t e n t t h a t i n c r e a s i n g u s o f Facebook t h r o u g h m obi l eapps o r o u r m obi l e w e b s i t e s u b s t i t u t e s f o r t h e u s e o fFa c e boo k t h r o u g h p e r s o n a l com pu t e r s where we do show a d s ,t h e number o f ads t h a t we d e l i v e r t o u s e r s and o u rr e v e n u e may be n e g a t i v e l y a f f e c t e d u n l e s s and u n t i l wei n c l u d e ads o r spons s t o e s on o u r m o b i l e apps andmobi w e b s i t e . We b e l i e v e t h a t p e o p l e a r o u n d t h e wor l dw i l l c o n t i n u e t o i n c r e a s e t h e i r u se o f Fa c e book fromm obi l e d e v i c e s , and t h a t some o f t h i s m o b i l e u s a g e sbeen a n d w i l l c o n t i n u e t o be a s u b s t i t u t e f o r u se o fFacebook t h r o u g h p e r s o n a l c o m p u t e r s . " Feb. 1R e g i s t r a t i o n S t a t e m e n t , a t 46: a c c o r d R e g i s t r a t i o nS t a t e m e n t , a t 51 .

We do n o t show ads o r d i r e c t l y g e n e r a t e any m e a n i n g f u lr e v e n u e f rom u s e r s a c c e s s i n g Fa c e book t h r o u g h o u r m obi l ep r o d u c t s . " Feb. 1 R e g i s t r a t i o n S t a t e m e n t , a t 79;a c c o r d R e g i s t r a t i o n S t a t e m e n t , a t 93.

We b e l i e v e t h a t m obi l e us o f Fa c e book i s c r i t i c a l t om a i n t a i n i n g u s e r growth and engagement o v e r t l o n gt e r m , and we a r e a c t i v e l y s e e ng t o grow m o b i l e us

a l t h o u g h such us does n o t c u r r e n t l y d i r e c t l y g e n e r a t eany m e a n i n g f u l r e v e n u e . 11 Feb. 1 R e g i s t r a t i o n S t a t e m e n t ,a t 81; a c c o r d R e g i s t r a t i o n S t a t e m e n t , a t 94.

The Feb. 1 R e g i s t r a t i o n S t a t e m e n t a l s o n o t e d t h a t

Facebook p r i o r i t i z e s u s e r engagement o v e r s h o r t - t e r m f i n a n c i a l

12



13/83

r e s u l t s , and t h u s f r e q u e n t l y make [s] p r o d u c t d e c i s i o n s t h a t

may r e d u c e o u r s h o r t t e r m r e v e n u e . R e g i s t r a t i o n

S t a t e m e n t , a t 17. I t a l s o e x p l a i n e d i t s r ev en u e t r e n d s :

Our r evenue t a r e a l s o a f c t e d by ad i n v e n t o r ymanagement changes a f f e c t i n g t h e number, s i z e , o rprominence o f ads w d i s p l a y. For example , i n t h ef o u r t h q u a r t e r o f 2010, we s i g n i c a n t l y i n c r e a s e d t h enumber o f on many Facebook s . As a n o t h e rexample , i n f o u r t h q u a r t e r o f 2011, we i n c r e a s e dt h e r e s e r v e ce ( i . e . , t h e minimum p r i c e t h r e s h o l d )i n o u r r t i s i n g a u c t i o n sy s t em o r d e r t o r e d u c e

t h e f r e q u e n c y w i t h which low q u a l y ads a r e d i s p l a y e dt o u s e r s . s ch an g e c a u s e d a i o n i n t h eo v e r a l l r o f ads shown and i n c r e a s e d t h e ave ragep r i c e a s a r e s u l t o f s i n c l u d i n gremoval o f ads wi th b i d s were below t h e r e s e r v ep r i c e some a d v e r t i s e r s r a i s i n g t h e i r b i d s i n

t o t h i s change . For t h i s p a r t i c u l a rwe t h a t t h e d e c r e a s e i n t h e numberd i t h e i n c r e a s e i n ave rage p r i c e p e ra p p r o x i m a t e l y o f f s e t e a c h o t r such t h a t t h e i m pac ton t o t a l r ev en u e was m i n i m a l .

I d . a t 46-47; a c c o r d R e g i s t r a t i o n a temen t , a t 53 .

The mark e t r e a c t e d s i v e l y t o t h e s c l o s u r e s i n

t h e R e g i s t r a t i o n S t a t e m e n t , i n c l u d i n g Company's

p o s i on c a p i t a l i z i n g mo b i l e marke t . ]I 97 . )

r e p o r t e d t h a t Facebook e x p e c t e d i t s n e x t b i l l i o n

u s e r s t o come m a i n l y from I e d e v i c e s , an d was t h e r e f o r e

i n c r e a s i n g i t s f o c u s on I e t e c h n o l o g y t o t a a d v a n t a g e o f

13



14/83


15/83

i n s t r u c t e d Facebook t o d e s c r i b e any known t r e n d s o r

u n c e r t a i n t i e s t h a t have had, o r t h a t you r e a s o n a b ly e x p e c t w i l l

have , a m a t e r i a l f a v o r a b l e o r u n f a v o r a b l e imp ac t on s a l e s o r

r e s u l t s o f o p e r a t i o n s . r d . a t 5 . 9

On March 7, 2012, Facebook r esp o n d ed t o t h e SEC's

comment l e t t e r . In i t s r e s p o n s e , Facebook s t a t e d t h a t i t cou ld

n o t d i s c l o s e t h e p o t e n t i a l impact o f mo b i l e u sag e on i t s r ev en u e

b ecau se i t was unab le t o d e t e r m i n e t h a t impac t . CAC ][ 102.)

Facebook a s s e r t e d t h a t because many o f i t s m o b i l e u s e r s a l s o

c o n t i n u e d t o a c c e s s Facebook t h r o u g h i r des k to p co mp u te r s ,

t h e Company "canno t s p e c i f i c a l l y d e t e r m in e how mo b i l e u se i s a

s u b s t i t u t e f o r , r a t h e r t h a n i n c r e m e n t a l t o , u se on p e r s o n a l

c o m p u t e r s . " Thus, Facebook s t a t e d t h a t i t was unab le t o

s p e c i f i c a l l y a s s e s s t h e imp ac t o f i n c r e a s i n g m o b i l e u s e on i t s

r ev en u e and f i n a n c i a l r e s u l t s a t t h a t t ime . ( Id .

Facebook s u b s e q u e n t l y r e v i s e d i t s R e g i s t r a t i o n

Sta temen t t o i n c l u d e more s p e c i c i n f o r m a t i o n abou t t h e t r e n d

o f a s i n g mo b i l e u sag e :

9 A c c o r d i n g t o t h e Lead P l a i n t i f f s , t h e SEC makes conunent l e t t e r s p u b l i c "noe a r l i e r t h a n 20 b u s i n e s s a f t e r i t h a s . d e c l a r e d a i o ns t a t e m e n t e f f e c t i v e . (Plo Op. , a t 9 n . 3 . ) The SEC L e : : t e r was made pClblicby t h e SEC on o r aroClnd June 15, 2 0 1 2 , a f t e r t h e da:::e o f F a c e b o o k ' s IPO.( I d .

15



16/83

I n c r e a s i n g Mobile Usage. I n c r e a s i n g use o f Facebook onmobile d e v i c e s w i l l a l s o a f our pe r fo rmance ,p a r t i c u l a y i f mobile use s u b s t i t u t e s f o r use onp e r s o n a l computers . H i s t o r i c a l l y , we have no t shown adst o u s e r s a c c e s s i n g Facebook th rough mobile apps o r ourmobile we b s i t e and we canno t be c e r t a i n t h a t our mobi lem o n e t i z a t i o n app roaches w i l l be s u c c e s s f u l i n g e n e ra t i n gmeaningfu l r evenue . We canno t q u a n t i f y t h e e x t e n t t owhich mobile usage o f Facebook i s s u b s t i t u t i n g f o r ,r a t h e r t h a n i n c r e m e n t a l t o , usage o f Facebook th roughp e r s o n a l compute rs , b u t we g e n e r a l l y e x p e c t mobile usaget o i n c r e a s e a t a f a s t e r r a t e t h a n usage th rough p e r s o n a lcomputers t h e f o r e s e e a b l e f u t u r e . See R e g i s t r a t i o nS ta t e m e n t , Mar. 7, 2012, a t 51 ("Mar. 7 R e g i s t r a t i o nS t a t e me n t " ) ; acco rd R e g i s t r a t i o n Sta tement , a t 53.

We had 432 m i l l i o n MAUs who u sed Facebook mobilep r o d u c t s i n December 2011. While most o f our mobileu s e r s a l s o a c c e s s Facebook th rough p e r s o n a l compute rs , wea n t i c i p a t e t h a t t h e r a t e o f growth i n mobile usage w i l lexceed t h e growth i n usage th rough p e r s o n a l co mp u te r s f o rt h e s e e a b l e f u t u r e [W]e do not c u r r e n t l yd i r e c t l y g e n e ra t e any meaningfu l revenue from t h e use o fFacebook mobile p ro d u c t s , and our a b i l i t y t o do sos u c c e s s f u l l y i s unproven . Accord ing ly, i f u s e r s

i n c r e a s i n g l y a c c e s s Facebook mobile p r o d u c t s as as u b s t i t u t e fo r a c c e s s th rough p e r s o n a l compute rs , and i fwe a r e unab le t o s u c c e s s f u l l y implement m o n e t i z a t i o ns t r a t e g i e s f o r our mobile u s e r s , o r i f we i n c u r e x c e s s i v eexpenses i n t h i s e f r t , our f i n a n c i a l pe r fo rmance anda b i l i t y t o grow revenue would be nega t l y a f f e c t e d .Mar. 7 R e g i s t r a t i o n Sta tement , a t 14; a c c o r d R e g i s t r a t i o nS ta t e m e n t , a t 14.

We had 488 m i l l i o n MAUs who u sed Facebook mobilep r o d u c t s i n March 2012. While most o f our mobile u s e r sa l s o a c c e s s Facebook th rough p e r s o n a l computers , wea n t i c i p a t e t h a t t h e r a t e o f growth i n mobile usage w i l lex ceed t h e growth i n usage th rough p e r s o n a l computers f o rt h e f o r e s e e a b l e f u t u r e [W]e do n o t c u r r e n t l yd i r e c t l y g e n e ra t e any meaningfu l revenue from t h e use o fFacebook mobile p ro d u c t s , and our a b i l i t y t o do sos u c c e s s f u l l y i s unproven ." R e g i s t r a t i o n Sta tement , A p r i l

16



17/83

23, 2012 , a t 14 ( " A p r i l 23 g i s t r a t i o n S t a t e m e n t ) ; seea l s o R e g i s t r a t i o n S t a t e m e n t , a t 14 ( ad d in g a d d i t i o n a ld i s c l o s u r e b a s e d on i n f o r m a t i o n f rom t h e seco n d q u a r t e rt h a t We b e l i e v e t h i s i n c r e a s e d u sag e o f Facebook onmo b i l e d e v i c e s has c o n t r i b u t e d t o t h e r e c e n t t r e n d o f o u r

d a i l y a c t u s e r s (DAUs) i n c r e a s i n g more r a p i d l y t h a nt h e i n c r e a s e t h e number o f ad s d e l i v e r e d ) .

Facebook a l s o i n c l u d e d p o s i t i v e s t a t e m e n t s r e g a r d i n g

mo b i l e u sag e :

We e x p e r i e n c e d growth i n DAUs [ d a i l y a c t i v e u s e r s ]a c r o s s m a j o r m a r k e t s i n c l u d i n g t h e U n i t e d S t a t e s ,B r a z i l , and I n d i a . I n c r e a s e d mobi usage was a keyc o n t r i b u t o r t o t h i s gr owt h . DAUs a s a p e r c e n t a g e o fMAUs [month ly a c t i v e u s e r s ] i n c r e a s e d f rom 55 i nMarch 2011 t o 58 i n March 2012, which we b e l i e v e wasd r i v e n e n t i r e l y by i n c r e a mo b i l e u sag e o f Facebook .We b e l i e v e t h a t i n c r e a s e s i n DAUs and i n DAUs a s ap e r c e n t a g e o f MAUs g e n e r a l l y p o s i t i v e l y a f f e c t o u rr evenue b e c a u s e i n c r e a s e s i n u s e r engagement maye n a b l e us t o d e l i v e r more r e l e v a n t commerc ia l c o n t e n tt o o u r u s e r s and may p r o v i d e us w i t h moreo p p o r t u n i t i e s f o r m o n e t i z a t i o n .

R e g i s t r a t i o n S t a t e m e n t , a t 50 .

In March and A p r i l 2C12, Facebook began t o p r e p a r e f o r

i t s " ro ad sh o w." (CAC JI 103 . ) Roadshows a r e a s e r i e s o f

m e e t i n g s a r ound t h e c o u n t r y, p r i m a r i l y w i t h g ro u p s o f

i n s t i t u t i o n a l i n v e s t o r s , where a company makes p r e s e n t a t i o n s and

answer s i n v e s t o r q u e s t i o n s r e g a r d i n g s upcoming IPO. The

r o a d s how i s an im p o r t a n t p a r t o f t IPO p r o c e s s a s t d i r e c t l y

17



18/83

m a r k e t s an IPO t o i t u t i o n a l i n v e s t o r s and g e n e r a t e s i n t e r e s t

i n t h e IPO. I d . ) As p a r t o f t h i s p r o c e s s compan s w l l

t y p i c a l l y p r o v id e s u n d e r w r i t e r s w i t h t h e company 's

e c t i o n s and un de t e r s 11 t y p i c a l l y use t h e s e

p r o j e c t i o n s t o c r e a t e t h e i r own a n a l y s i s and p r o v id e t h e i r own

p r o j e c t i o n s .

Def endan t Ebersman and Facebook ' s T r e a s u r e r C i p o r a

Herman ("Herman") , were t h e Facebook e x e c u t i v e s who h ad

p r i n c i p a l re spons l t y r manag ing t h e Company ' s roadshow.

CAC n 1 0 5 . ) Lead Underwr e r s b u i l t t h e "book" o f o r d e r s

f o r t h e IPO d u r i n g roadshow, whi c o n t a t h e number o f

s h a r e s each i n s t i o n a l i n v e s t o r wanted t o p u r c h a s e , a s w e l l

as p r i c e t h a t each i n v e s t o r was w i l l i n g t o pay r t h e

s t o c k . Facebook and t h e Lead U n d e r w r i t e r s t h e n u sed t h e o r d e r s

i n t h e book t o e r m i ne how many s h a r e s t o s e l l t h e IPO and

t h e p r i c e p e r s h a r e . I d .

In t i m e l e a d i n g t o t h e roadshow, Facebook

c o n t i n u e d t o make p o s i t i v e p u b l i c s t a t e m e n t s emp h as i z in g i t s

gr owt h . CAC n 11 0 . ) These comments i n c l u d e d p o s i t remarks

on Faceboo k s l ty t o m o n e t i z e t h e mo b i l e mar In t h e

March 7, 2012 amendment t o t h e R e g i s t r a t i o n S ta t e m e n t , Facebook

s t a t e d t t was b e g i n n i n g t o d i s p l a y one o f i t s p r i n c i p a l

18



19/83

a d v e r t i s i n g p ro d u c t s t o mobi l e u s e r s . See Mar. 7 R e g i s t r a t i o n

S ta t e me n t , a t 4 ( " I n February 2012, we announced p l a n s t o

i n c l u d e sponsored s t o r i e s i n u s e r s ' mobi l e News F e e d s . ) .

Facebook a l s o no te d t h a t t h e number o f u s e r s who acces s ed i t s

webs e th rough mobi le p ro d u c t s had grown t o 8 8 m i l l i o n a s o f

March 31, 2012, an i n c r e a s e o f 15 ove r such u s e r s a s o f

December 2011, i n t h e Company's A p r i l 23, 2012 amended

R e g i s t r a t i o n S ta t e me n t . A p r i l 23 R e g i s t r a t i o n St a t emen t , a t 1.

On A p r i l 16, 2012, t h e Company's Chie f F i n a n c i a l

O f f i c e r ("CFO"), Defendant Ebersman, p r o v i d e d revenue gu idance

t o t h e a n a l y s t s from i nve s tme n t banks t h a t were u n d e rw r i t i n g

t h e IPO ( t he " S ynd ic a t e A n a l y s t s ) . (CAC J[ 116 . ) Th is

p r e s e n t a t i o n i n c l u d e d Facebook ' s e s t i m a t e d r e v e n u e s f o r t h e

second q u a r t e r o f 2012 and t h e f u l l y ea r. This i n fo rma t i o n

a l lowed t h e Sy n d i ca t e A na ly s t s t o g e n e r a t e e s t i m a t e s o f t h e

Company's revenues and f i n a n c i a l r e s u l t s , which would t h e n be

i n co rp o ra t e d i n t o an i n s t i t u t i o n a l s e l l i n g memoranda" t h a t t h e

Underwr i te r Defendan t s would use t o marke t t h e IPO t o

i n s t i t u t i o n a l i n v e s t o r s . I d . )

At t h e me e t i n g , Ebersman in fo rmed t h e S y n d ic a t e

A n a ly s t s t h a t Facebook b e l i e v e d t would r e p o r t r evenues o f a s

much a s $1 .2 b i l l i o n f o r t h e second q u a r t e r o f 2012 and $5

19



20/83

b i l l i o n f o r t h e f u l l 2012 y ea r. These f i g u r e s t r a n s l a t e d i n t o

y e a r - o v e r - y e a r growth r a t e s o f as much as 34 f o r t h e second

q u a r t e r and 35 f o r t h e y ea r. (CAC g 107 . ) The S yn d ic a t e

A na ly s t s i n c o r p o r a t e d t h e Company ' s i n t e r n a l e s t i m a t e s i n t o

t h e i r f i n a n c i a l models and v i r t u a l l y m i r r o r e d Facebook ' s

p r o j e c t i o n s : The S ynd ic a t e A n a l y s t s p r e d i c t i o n s t r a n s l a t e d

i n t o e x p e c t e d y e a r - o v e r - y e a r growth r a t e s o f up t o 35 f o r t h e

second q u a r t e r and 39 f o r t h e y ea r. The S ynd ic a t e A n a l y s t s

e s t i m a t e s were t h e n i n c o r p o r a t e d i n t o t h e i n s t i t u t i o n a l s e l l i n g

memoranda t h a t t h e U nde r w r i t e r Defendan t s used t o marke t t h e IPO

t o i n v e s t o r s . ( I d . cncn 108-09 . )

On May 3, 2012, Facebook f i l e d an amended R e g i s t r a t i o n

Sta temen t ( the May 3 R e g i s t r a t i o n S t a t e me n t ") announc ing t h a t

i t was p la n n ing t o s e l l more t h a n 337 m i l l i o n s h a r e s i n t h e IPO

a t a p r i c e between $28 and $35 p e r s h a r e . (CAC


21/83

i n c i p a l a d v e r t i s i n g p ro d u c t s ] on mobi le devices and

t h a t e adver t i s emen t s had become a r e a l l y n a t u r a l p a r t of

Facebook mobi le e x p e r i e n c e . ( Id . q 114 . )

The mar i n t e r e s t f o r Facebook sh a re s d u r i n g t h i s

t was ex t remely h igh . I n v e s t o r demand t o a t t e n d t h e roadshow

was huge, and many proj e c t e d t he I PO t o be one of r g e s t

IPOs h i s t o r y. New York Times ed on May 3, 2012:

Fa k, which plans t o make a marke t debut t h i smonth t h a t c ou ld v a l u e t a t $86 b i l l i o n i s s to ckt h a t everyone seems t o want . ex c i t emen t overFacebook has come on t h e back of i t s r ap growth .For many, Facebook i s t h e I n t e r n e t . A f t e r a f l u r r y o feye -popping mar debu t s by o t h e r I n t e r n e t s t a r t

Facebook 's w i l l be t b i g g e s t y e t . Demandt o a t t e n d Facebook [roadshow] p r e s e n t a t i o n s hasbeen e x t r a o r d i n a r i l y h igh , wi th u n d e r w r i t e r s a l r e a d ydrawing up wai t i ng l i s t s f o r meet ings [ . J 10

S i m i l a r l y Reuters quoted an a n a l y s t from t h e r e sea rch

f i rm IPO Boutique as s t a t i n g t h a t I have no t seen a s b road

based i n t e r e s t in an IPO s Google . I n v e s t o r demand l S

immense. I ex p ec t a roads how t h a t w i l l r i v a l a l l roadshows

where i n v e s t o r s w i l l be t u rned away a t t he d o o r.

10 Susanne C r a i g R u s l i~ = = : . . . : . : . . : : : . . : . : : kN. Y. TIMES May 3,

0 3 / s ma l l - in v e s to r s -ma y -g e t - to -o w n -a -b i t - o f - f ac e b o o k / .

11 A l i s t a i r Barr Alexei Oreskovic ,REUTERS May 2, 2012, h t t p :

facebook-ipo-idUSBRE8401PD20120502.

21



22/83

Facebook h e l d s f i r s t l i v e roadshow p r e s e n t a t i o n on

May 7, 2012. (CAC JI 11 8 . ) Based on t h e r o a d s how p r e s e n t a t i o n

and t h e R e g i s t r a t i o n S t a t e m e n t , a n a l y s t s w i d e l y recommended t h a t

i n v e s t o r s buy Facebook s t o c k . Anal t s a l s o w i d e l y r e p o r t

t h a t r t h e second q u a r t e r and y e a r - e n d 2012, Facebook would

e x p e r i e n c e r evenue g ro w th r a t e s o f a t l e a s t 35 r - o v e r - y e a r

b ased i n p a r t on t h e Company ' s a b i l i t y t o make money from i t s

mobi u s e r s . ( r d . JICJ[ 1 2 0 -2 1 . ) A n a l y s t s d i d n o t a p p e a r w o r r i e d

ab o u t t h e m o n e t i z a t i o n i s s u e s a s s o c i a t e d w i t h mo b i l e u s a g e . A

S t e r n e Agee r e p o r t recommended a "buy" o f Facebook s t o c k n o t i n g

t h a t Facebook had a s t r o n g p o s i t i o n i n t h e mo b i l e m ar ke t "[wJ h

88 m i l l i o n MAUs [month ly a c t i v e u s e r s J u s i n g Facebook m obi l e

p r o d u c t s i n t h e month o f March 2012, [FacebookJ c l e a r l y has t h e

r e a c h on m obi l e p l a t f o r m s r d . JI 1 2 1 . ) S t e r n e Agee

co n c lu d ed t h a t "m ob i l e m o n e t i z a t i o n [ i s ] a s i g n i f i c a n t l o n g - t e r m

g ro w th o p p o r t u n i t y f o r [Facebook] . r d .

However, on May 7, 2012, h o u rs a f t e r i t s r s t

ro ad s how p r e s e n t a t i o n F a c e b o o k ' s management d e t e r m i n e d t h a t t h e

Company was f a c i n g d i f c u l t y i n meet in g i t s p r e v i o u s r evenue

p r o j e c t i o n s f o r t h e second q u a r t e r o f 2012 and t h e f u l l y e a r.

(CAC CJ[ 122 . ) Two deve l opm en t s were c a u s i n g t h e ch an g e i n

a n a l y s i s : F i r s t d u r i n g t h e second q u a r t e r o f 2012, F a c e b o o k ' s

22



23/83

u s e r s i n c r e a s i n g l y m ig r a t e d from d e s k t o p co mp u te r s , where t h e

Company d i s ayed l a r g e amounts o f a d s , t o mo b i l e d e v i c e s , where

t h e Company d i l a y e d much l e s s a d v e r t i s i n g . As su ch , cebook

was g e n e r a t i n g l e s s a d v e r t i s i n g r ev en u e t h a n p r o j e c t e d . Second ,

t h e Company had made c e r t a i n p r o d u c t c i s i o n s i n t h e second

q u a r t e r o f 2012 t h a t r ed u ced t h e a v e r a amount o f

a d v e r t i s e m e n t s d i ayed t o u s e r s on some p a g e s , which

e x a c e r b a t e d t h e t e r i o r a t i o n i n i t s a d v e r t i s i n g r ev en u es cau sed

by i n c r e a s i n g m obi l e u sag e . ( I d .

On t h e ev en in g o f May 7, 2012, Ebersman ap p ro ach ed

I e Morgan S t a n l e y b an k er on t h e IPO, Mi chae l Grimes

IfGr s If), and i n fo rmed him t h a t , b a s e d on second q u a r t e r d a t a

r e c e i v e d t o d a t e , Ebersman was no l o n g e r c o n f i d e n t t h a t Facebook

would meet s i n t e r n a l r ev en u e e s t i m a t e s . ( I d . J[ 1 2 3 . )

Ebersman i n fo rmed Grimes t h a t , s e d upon t h e i r e x p e r i e n c e i n

Q t o d a t e , [Ebersman] was l e s s c o n f i d e n t i n h i s f i n a n c i a l

p r o j e c t i o n s i n r e a c h in g o r e x c e e d i n g h i s f i n a n c i a l p r o j e c t i o n s

t h a n p r e v i o u s l y [ s i c ] . I d . ) rsman f u r t h e r i n rmed Grimes

t h a t two deve l opm en t s h ad cau sed t h e d e t e r r a t i o n i n F a c e b o o k s

revenues : r e a s i n g m obi l e u sage an d t h e Company s p r o d u c t

d e c i s i o n s . I d .

By May 8 , 2012, Facebook had c u t i t s p r o j e c t e d r evenue

23



24/83

f i g u r e s f o r t h e second q u a r t e r 2012 b y $100 m i l l i o n , o r more

t h a n 8.3%, and f o r t h e y e a r by $175 m i l l i o n , o r 3.5%. (CAC

j[ 124 . ) Faceb o o k d e t e r m i n e d t h a t i t s r evenue f o r t h e second

q u a r t e r would a s low a s $1 .1 b i l l i o n , o r 8.3% b e lo w t h e t o p

o f i t s p r i o r r a n g e , and s r evenue f o r 2012 would b e be tween

$4 .825 b i l l i o n and $4 .85 b i l l i o n , o r as much as $175 m i l l i o n

l e s s t h a n p r e v i o u s l y e s t i m a t e d , a d e c l i n e o f up t o 3.5%. The

sed r e v e n u e e s t i m a t e s t r a n s l a t e d i n t o s h a r p l y lower y e a r -

o v e r a r r evenue growth r a t e s o f a sl i t t l

a s 23 f o r t h e

second q u a r t e r an d 30 f o r t h e r , a s compared t o growth r a t e s

o f a s much a s 34 f o r t h e second q u a r t e r and 35 r t h e y e a r

based on t h e Company 's p r i o r e s t i m a t e s . ( I d. ) These f i g u r e s

were f a r below t h e S y n d i c a t e A n a l y s t s ' e s t i m a t e s . ( I d . J[ 126 . )

On May 8, 2012 , Fa c e b o o k ' s mo st s e n i o r e x e c u t i v e s

rmined t h a t t h e change was so s i g n i f i c a n t t h a t i t w a r r a n t e d

d i s c l o s u r e t o t h e S y n d i c a t e A n a l y s t s . ( I d . J[ 1 2 5 . ) Fa c e b o o k ' s

T r e a s u r e r , Herman, s e n t an e m a i l t o employees i n t h e f i n a n c e

d e p a r t m e n t wi t h e su b j e c t l i n e : Q2 e s t i m a t e s f rom a n a l y s t s

IMPORTANT PLS THIS MORNING. ( I d . (emphas i s i n o r i g 1 .

Herman w r o te t h a t Faceb o o k h ad " u p d a t o u r f o r e c a s t and w e ' r e

t r y i n g t o g au g e how f a r o f f o u r new f o r e c a s t i s f rom where t h e

Herman s t a t e d t h a t andn a l t s a r e coming o u t .

Morgan S t a n l e y b a n k e r s i m m e d i a t e l y needed t o s e e t h e q2-q4 by

24



25/83

q u a r t e r r ev en u e e s t s from t h e a n a l y s t s f o r whom we have

d e t a i l m o d e l s , " and t h a t sh e was H[c]o p y in g [a Morgan S t a n l e y

b an k er ] on t h i s so we can g e t some e f f i e n c y - I d o n t want t o

be t h e b o t t ck g e t t i n g t h e i n f o t o MS." ( I d . A f t e r

Morgan Stan ban r s had compared Facebook ' s r ev en u e f i g u r e s

w i t h t h e S y n d ic a t e A n a l y s t s e s t i m a t e s , Grimes a d v i s e d Ebersman

t h a t Facebook s h o u l d i m m e d i a t e l y p r o v id e i t s new r ev en u e f i g u r e s

t o t h e S y n d ic a t e A n a ly s t s so t h a t t h e y c o u ld s e t i r models

ed on t h i s new i n f o r m a t i o n and p r o v id et

t o t h e Company's

l a r g e s t p o t e n t i a l i n v e s t o r s . ( I d . J[ 126 . )

The nex t day, May 9, 2012 , Facebook f i l e d a Free

Wr i t Prospec tu s ( t h e HFWPII) and an Amended R e g i s t r a t i o n

Sta temen t ("May 9 R e g i s t r a t i o n S t a t e m e n t ") . CAC J[ 1 2 8 . ) The

May 9 i s t r a t i o n S t a t e m e n t and FWP bo th s t a t e d :

Based upon our r i e n c e i n t h e seco n d q u a r t e r o f2012 t o d a t e , t h e t r e n d we saw i n t h e f i r s t q u a r t e r o fDAUs [ d a i l y a c t u s e r s ] i n c r e a s i n g more r a p y t h a nt h e s e i n number o f ads d e l i v e has c o n t i n u e d .We b e l i e v e s t r e n d i s d r i n p a r t by i n c r e a s e dusage o f Facebook on mo b i l e d e v i c e s where we have o n l yr e c e n t l y begun showing an im m a te r i a l number o fsponsored s t o r i e s i n News Feed , and i n p a r t due t oc e r t a i n p ag es h av in g fewer ads r page as a r e s u l t o fp r o d u c t c i s i o n s .

May 9 s t r a t i o n S ta t e m e n t , a t 57; FWP.

25



26/83

9

The FWP and May 9 R e g i s t r a t i o n S t a t e m e n t l e d t o some

media r e p o r t s on Facebook ' s i s s u e s t h m obi l e m o n e t i z a t i o n . 12

These s t o s r e p o r t e d t h a t t h e m i g r a t i o n o f Facebook u s e r s t o

i t s mobi p l a t f o r m was compromising t h e Company ' s a b i l i t y t o

g e n e r a t e ad r e v e n u e . One r e p o r t went so f a r as t o warn t h a t

t h e r e was a p o s s i b i l y Facebook may miss i t s second q u a r t e r

p r o j e c t i o n s . 13

On May 9, 10 and 15 , a f t e r l i n g t h e FWP and t h e May

R e g i s t r a t i o n S t a t e m e n t , Herman, Facebook ' s T r e a s u r e r , made

n i n e t e e n s c r i p t e d c a l l s w i t h t h e S y n d ic a t e A n a l y s t s ( t h e "Herman

2

May 9,A p r i l Dembosky, k Admi t s To Mobi le Weakness FIN. TIMES

: ! ! b l o g s . f t . t e c h - b l c g 2012 05 f a c e b o o k - a d m i t s - t c - m o b i l e

w e a k n e s s ! ("Facebook s a i d t h e m i g r a t i o n c f i t s u s e r s t o m o b i l e p l a t f o r m s i scompromis ing i t s a b i l i t y t o make money f rom them. " ) ; Henry B l o d g e t ,- = - = _ - = - : ' . ~ J . : . . . : : . - - = - - - = . . : = - : : . . ,Bus. INSIDER May 10, 2012, h t t p : / / w w w. b u s i n e s s i n s i d e r . c o m /

k - m u p p e t - b a i t - 2 0 1 2 5 ( w r i t i n g t h a t t h e d i s c l o s u r e s r e v e a l e d t h a t t h ecompany " i s u n l i t o be a b l e t o g e n e r a t e a s much r e v e n u e p e r u s e r f rommobi le a s t does f rom t h e web ," and t h a t t h i s c o n c e r n , combined w i t h t h ef a c t t h a t " F a c e b o o k ' s growth i s d e c e l e r a t i n g , " make t h e o f f e r i n g "muppet

VENTUREBEAT May 13,numbers ! ( "Mob i le i s F a c e b o o k ' s a d v e r t i s i n g A c h i l l e s ' h e e l , a f a c t t h e s o c i a ln e t w o r k was n o t o n l y q u i c k t o p o i n t o u t t o i n v e s t o r s i n t h e f i r s t S - l , b u ta l s o a n x i o u s t o e mp h a s i z e i n t h e l a t e s t p r o s p e c t u s a m e n d m e n t . " ) .

h t t p :

s F a s t e r ThanPRIVCO May 2012,

t s - m o b i l e - s h i f t - d a m a g i n gFWP " r e v e a l s f a s t e r o s i o n i n

c o r e a d v e r t i s i n g b u s i n e s s , " o f f e r s "a s t u n n i n g p r e v i e w o f a lower t h a nQ2 as a r e s u l t o f t h e s h i f t t o m o b i l e d e v i c e s , " and " E f f e c t i v e l y

Warns I n v e s t o r s Tha t Facebook Wi l l Miss I t s S e c o n d - Q u a r t e r P r o j e c t i o n s " ) ;J e n n i f e r Van Grove,

May 9,. p r i v c o .c o m ! b r e a k i n g - n e w s - fa c e b o o k s - a d m i t s -m o b i l e - s h if t - d a m a g i n g

b u s i n e s s - f a s t e r - t h a n - e x p e c t e d .

26

http:///reader/full/blogs.fthttp:///reader/full/http://www.businessinsider.comhttp:///reader/full/blogs.fthttp:///reader/full/http://www.businessinsider.com


27/83

C a l l s ) (CAC J[ 132 . ) During t h e s e c a l l s , Herman t o l d t h e

S ynd ic a t e A na ly s t s t h a t Facebook had s h a r p l y r e d u c e d revenue

f i g u r e s t h a t t h e Company had p r o v ide d t o them t h r e e weeks

e a r l r . The s c r i p t f o r t h e Herman C a l l s s t a t e d a s fo l l o w s :

I wanted t o rna s u r e you saw t h e d i s c l o s u r e we madei n our amended f i l i n g . The upsho t o f t h i s i s t h a t web e l i e v e we a r e going t o come i n [on] t h e lower end o four $1 .1 t o $1 .2 bn range f o r Q2 b a s e d upon t h e t r e n d swe d e s c r i b e d i n t h e d i s c l o s u r e . A l o t o f i n v e s t o r shave been fo c u s e d on whether t h e t r e n d o f ad

impr e s s ions p e r u s e r d e c l i n i n g ( p r i m a r i l y as a r e s u l to f mobi l e ) was a one - t ime , o r c o n t i n u i n g , o ccu r r en ce .As you can se e from our d i s c l o s u r e , t h e t r e n d i sc o n t i n u i n g . You can d e c ide what you want t o do w i thyour e s t i m a t e s , our long te rm c o n v i c t i o n i s unchanged ,b u t i n t h e ne a r t e rm we se e t h e s e t r e n d s c o n t i n u i n g ,hence our be ing a t t h e low end o f t h e $1 ,100 $1 ,200r ange .

Id . j[ 133 . )

The Sy n d i ca t e A na lys t s r e v i s e d i r f i n a n c i a l models

t o r e f l e c t F a c e b o o k ' s r e d u c t i o n i n i t s revenue p r o j e c t i o n s :

e s t i m a t e s o f t h e Company's second q u a r t e r revenue were c u t by a s

6 9-much a t 7 and annua l revenue as much a s o ( I d . j[ j[ 1 3 5 - 3 6 . )

The S y n d ic a t e A n a l y s t s immedia te ly p r o v i d e d t h i s new i n fo rma t i o n

t o some o f F a c e b o o k ' s most impor t a n t p o t e n t i a l i n v e s t o r s . 14 Id .

would l a t e r r e p o r t t h a t c e r t a i n ~ n s t i t u t ~ o n s d e s c r ~ e dt h eS y n d i c a t e A n a l y s t s ' d e c i s i o n t o r e d u c e t h e i r r e v e n u e e s t i m a t e s d u r i n g t h et im e when t h e r o a d s how was o c c u r r i n g as "a ~ g s h o c k , "very, ve ryu n u s u a l , a "bombs he l l , " and s o m et h i ng t h a t t h e y had "never b e f o r e se e n

27

14



28/83

Jl 137 . ) The l owered revenue f i g u r e s r a i sed a s i g n i f i c a n t red

f l a g t o t h o s e i n v e s t o r s who r e c e i v e d them. ( I d . Jl 139.)

Indeed , one hedge fund t h a t was warned by an U n de r w r i t e r

Defendant , C a p i t a l Resea rch & Management , conc luded t h a t t h e IPO

p r i c e o f $38 p e r s h a r e was t o o h i g h . I d .

S e l e c t S ynd ic a t e A n a l y s t s ' p r o j e c t i o n s were r e v i s e d

f o r t h e second q u a r t e r a s f o l l o w s :

Synd i ca t e Pre May 9 Post May 9 Per cen t Change I

An aly s t I Es t i m a t e Rev i sed. Es t i m a t e

iI oldman Sachs

I J . P. Morgan

Morgan S t a n l e y

1$1 . 207I

$1 .182

$1 .175

b i l l i o n

b i l l i o n

b i l l i o n

$1 . 125I

I $1. 096i

I $1 .111

b i l l i o n

b i l l i o n

b i l l i o n

-6 .79%

-7.27%

5 . 45 %

i

I

i

i

Bank o America $1 . 166 b i l l i o n 1$1 .100 b i l l i o n -5 .66%

CAC ~ J l 108 , 136 . )

S i m i l a r l y , t h e p r o j e c t i o n s f o r t h e y e a r - e n d 2012 were

2012 / 05 / 22 / u s - f a c e b o o k - f o r e c a s t s - idUSBRE8 4LO 6920120522;

i n 10 y e a r s . A l i s t a i r B a r r , e sREUTERS, May 22, h t t p : . r e u t e r s . c o m / a r t i c l e /

CAC n 14, 38,166. ) s i m i l a r l y wro t e t h a t t h e r e d u c t i o n i n r evenuee s t i m a t e s d u r i n g t h e r o a d s how was h i g h l y u n u s u a l a n d t h a t t h e y

d u r i n g 20 y e a r s i n and a round t h e t e c h IPO b u s i n e s s .

28



29/83

15

( r e p o r t i n g t h a t Facebook was " t e l l i n g t h a t s a l e s may n o t meet t h e i rmo s t t im i s t i c pro j e c t io n s ) ; Hen r y B 1 U H_ _ c . . . : : . . : . . - ' - - - ' - ' - ' - , . : . - ' - - ' - ' - ' - ' - = . . . . : : - - ' - - ' - ' - ' - - ' - ' - ' - ' - - - ' ' - - ' - ~

h t t p : / / w w w. b u s i n e s s i n s i d e r . c o m /

" s a i d t o have t o l d i n v e s t o r se c t i o n s " ) ; Faoebook IPO:

WASH. POST, May 11, 2012,ines s /35454711 1 f acebook-

Bus. INSIDER, May 10, 2012,k-demand-2012-5 (Facebook i s

h t t p : c l e s . w a s h i n g t o n p o s t .

r e v i s e d as l l o w s :

I Synd i ca t e Pre-May I Post-May 9 Per cen t ChangeAn aly s t Es t i m a t e Rev i sed

Es t i m a t eI

Goldman Sachs $5 .169 b i l l i o n 1$4.852 b i l l i o n 1 6 . 13 % I

J .P. Morgan $5.044 b i l l i o n $4 .839 b i l l i o n -4.06%

Morgan S t a n l e y $5 .036 b i l l i o n $4.854 b i l l i o n -3 .6 1

$5.040 b i l l i o n $4 .815 b i l l i o n Bank o America -4.46%

( Id .

Facebook S r e d u c t i o n i n i t s p r o j e c t i o n s was r e p o r t e d

t h e media p r i o r t o t h e IPO. 15 S e v e r a l o f t h e s e r e p o r t s on ly

n o t t h a t Faceb o o k s revenue "c o u l d be harmed" o r t h a t t h e

m i g r a t i o n t o m o b i l e "may n e g a t i v e l y a f f e c t " f i n a n c i a l r e s u l t s .

CAC 'll'll 140-41 . ) However, a n a l y s t s o t h e r t h a n t h e S y n d i c a t e

S erena S a i t t o e t a l . ,Fo recas t B L O O ~ l B E R GMay 1 1 , 2 0 1 2 , h t t p : . b loomberg.0 5 - 1 0 / f a c e b o o k - i p o - sa i d - t o - m e e t - w e a k e r - th a n - e x p e c t e d - i n v e s to r - d e m a n d . h t m l

i p o -so c ia l -n e two rk - faceb o o k -co mmo n -s t o ck (same); Kim Pete r son , I kPO MSN MONEY, May 11, 2012, h t t p : / / mo n ey.msn . co m/ t ech n o l o g y

=769ce83c-2bef -423 l -b384-957272a laa25 (same);

i n v e s t o r sh o u l d be

WALL ST. J .S a i t t o Bloomberg a r t i c l e as

about i n t o t h i s weekend") .

29



30/83


31/83

o r 84 m i l l i o n s h a r e s . ( Id . [ [ 1 4 7 - 4 8 . )

Facebook comple ted t h e PQ as s ch ed u l ed a f t e r t he

c l o s e of marke t on May 17 , 2012 . CAC


32/83

c l o s e d a t $38.23 . I d .


33/83

Facebook ' s b u s i n e s s was d e t e r i o r a t i n g r a p i d l ybetween t h e s t a r t o f t h e roadshow and t h e mid d le o f

roadshow. Any t i m e a b u s i n e s s o u t lo o kd e t e r i o r a t e s t h a t r a p i d l y , a la rm l l s s t a r t g o in g o f fon Wall r e e t , and s t o c k s p lunge . IS

On May 22, 2012, R e u t e r s r t h e r r e p o r t e d t h a t t h e

l e a d u n d e r w r i t e r s , Morgan S t a n l e y, J .P.Mo rg an and Goldman Sach s ,

a l l had s i g n i f i c a n t l y c u t t h e i r r ev en u e f i g u r e s r Facebook

whi le t h e IPO roadshow was underway, a h i g h l y unusua l move, b u t

on ly t o l d a few m a j o r i e n t s a b o u tr

ad j us tmen t .19

CAC

f 1 6 5 . ) I t i s h i g h l y unusua l f o r t h e l e a d u n d e r w r i t e r s t o

s i g n i f i c a n t l y c u t t h e i r r ev en u e f i g u r e s i n t h e mi t o f a

roadshow. ( I d . f f 166-68 . )

The CAC a l l e g e s t h a t Facebook i l e d t o d i s c l o s e

mate a l fo rma t ion i n Facebook ' s R e g i s t r a t i o n S t a t e m e n t and

o t h e r d i s c l o s u r e s and t h e R e g i s t r a t i o n S t a t e m e n t made mate a l l y

u n t r u e and m is l e a d in g s t a t e m e n t s and o m is s io n s . Lead i n t i f f s

o f f e r two p r i m a r y t h e o r i e s o f l i a b i l ( i ) Facebook ' s l u r e

t o d i s c l o s e w h e t h e r i n c r e a s i n g mo b i l e u sag e and Facebook ' s

9 F e l i x Salmon, REUTERS, 22, 2012,h t t p : / / b l o g s . r e u t e r s . f e l i x - s a f a c e b o o k - e a r n i n g sf o r e c a s t . - s c a n d a l / ( [H] e r e ' s a m a t e r i a l nonpub l i c f a c t a b o u t Facebook, whichr e t a i l i n v e s t o r s and everybody e l s e i n t h e d e a l d e s e r v e d t o know: a l l t h r e eunderwr i t e r s c u t t h e i r e s t i m a t e s s im u l t a n e o u s ly, i n r e s p o n s e t o some veryminor changes i n t.he r e v i s e d IPO p r o s p e c t u s . ) .

33

http://blogs.reuters/http://blogs.reuters/


34/83

produc t d e c i s i o n s had o r were r e a so n a b l y e x p e c t e d t o have a

m a t e r i a l u n f a v o r a b l e impact on r evenues and t o what e x t e n t t h e s e

t r e n d s had o r were r e a so n a b l y e x p e c t e d t o impact Facebook ' s

revenues were omiss ions o r f a l s i t i e s o f fo rmat ion r e q u i r e d f o r

d i s c l o s u r e by I tem 303 of Regula t ion S-K; and ( i i ) t h e Company's

may and i f s t a t e me n t s r e g a rd i n g t h e impact o f t h e i n c r e a s i n g

mobile usage and t h e Company s p r o d u c t d e c i s i o n s on Facebook' s

revenues r e p r e s e n t e d a f f i r m a t i v e m a t e r i a l m i s r e p r e s e n t a t i o n s .

I I i s c u s s i o n

Standard o f Review

n a mo t io n to d i sm i s s p u r su a n t t o Fed. R. Civ. P.

12 (b) (6) , a l l f a c t u a l a l l e g a t i o n s i n t h e compla in t a re a c c e p t e d

as t r u e , and a l l i n rences a r e drawn i n f a v o r o f t h e p l e a d e r .

Mi l l s v . Po l a r Molecu la r Corp . , 12 F.3d 1170, 1174 (2d C i r.

1993) . The i s s u e i s no t whether a p l a i n t i f f w i l l u l t i m a t e l y

p r e v a i l but whether t h e c l a i m a n t i s e n t i t l e d t o o f f e r ev idence

t osuppor t t h e

c l a i m s .

Real E s t a t e S o l u t i o n s , 261 F.3d 179, lS7 (2d C i r . 2001) (quo t ing

Pond I v . Town o f Darien 56 F.3d 375, 37S (2d C i r .

1995) , c e r t . den ied , 519 U.S. SOS, 117 S. Ct . 50, 136 L. Ed. 2d

14 (1996)} .

34



35/83

~ ~

To s u rv i v e a motion t o d i sm i s s p u r su a n t t o Rule

12 (b) (6) , a compla in t must c o n t a i n s u f f i c i e n t f a c t u a l ma t t e r,

accep ted as t r u e , t o ' s t a t e a aim t o r e l i e f t h a t i s p l a u s i b l e

on s f a c e . ' Ash c r o f t v . 556 U.S. 662, 663, 129 S. Ct.

1937, 1940, 173 L Ed. 2d 868 (2009) (quo t ing Bel

Twombl , 550 U.S. 544, 570, 127 S. Ct . 1955, 167 L Ed. 2d 929

(2007)) . This i s no t i n t e n d e d t o be an one rous burden , a s

p l a i n t i f need on ly a I l e f a c t s s u f c i e n t i n o rd e r t o

nudge[] t h e i r aims a c r o s s t h e l i n e from c o n c e i v a b l e t o

p l a u s e . Twombly, 550 U.S. a t 570.

P i n t i f a l l t h a t Defendan t s v i o l a S e c t i o n s

11, 12 and 15 o f t h e S e c u r i t i e s Act . S e c t i o n 11 imposes s t c t

l i a b i l i t y on i s s u e r s and s i g n a t o r s , and n e g l i g e n c e I i i l i t y

on u n d e rw r i t e r s , where any p a r t o f t h e r e g i s t r a t i o n s t a t e me n t ,

when such p a r t became e f f e c t i v e , c o n t a i n e d an u n t ru e s t a t e m e n t

o f a m a t e r i a l o r o m i t t e d t o s t a t e a m a t e r i a l c t r e q u i r e d

t o be s t a t e d t h e r e i n o r n e c e s sa r y t o rn t h e s t a t e me n t s t h e r e i n

not mi s l e a d i n g . 15 U.S.C. 7 7 k (a ) . S e c t i o n 12 (a) (2) imposes

I i l i t y under s i m i l a r c i r c u m s t a n c e s m i s s t a t e m e n t s o r

omiss ions i n a p ro s p e c t u s , on [a ] ny r son who o f f e r s o r

s e l l s a s e c u r i t y by means o f a pro c t u s o r 0

communicat ion, which i n c l u d e s an u n t r u e s t a t e me n t o f a m a t e r i a l

35



36/83

f a c t o r o mi t s t o s t a t e a m a t e r i a l f a c t n e c e s s a r y o r d e r t o

make t h e s t a t e m e n t s n o t m i s l e a d i n g . f 15 U.S.C.

7 7 l ( a ) (2 ) . S e c t i o n 15 o f t h e c u r i t i e s Act makes a c o n t r o l

pe rson l i a b l e f o r c a u s in g v i o l a t i o n s o f S e c t i o n s 11 and 12. 15

U.S.C. 770; s e e a l s o P a n t h e r P a r t n e r s v. Ik an o s Commc'ns,

I n c . 681 F. 3d 114 , 120 (2d C i r . 2 0 1 2 ) .

C C does n o t a l l e g e f r a u d ; Lead PIa i f f s i n s t e a d

a l l e g e t h a t Facebook a c t e d n e g l i g e n t l y i n p r e p a r i n g i t s

R e g i s t r a t i o n S t a t e m e n t . N e i t h e r s c i e n t e r , r e l i a n c e n o r l o s s

c a u s a t i o n i s an e l emen t o f S e c t i o n 11 o r S e c t i o n 12 (a) (2)

c ims. I d . S e c t i o n 11 r e q u i r e s o n l y o r d i n a n o t p l e a d i n g

s u b j e c t o n l y t o t h e ' s h o r t and p l a i n s t a t e m e n t '

r e q u i r e m e n t s o f F e d e r a l Rule o f C 1 P r o c e d u r e 8 (a) . Li tw

v . B l a c k s t o n e L.P. 634 F.3 d 706, 715 (2d C i r. 2 0 11 ) .

S e c t i o n 11 and 12 (a) (2) c l a i m s t h a t do n o t sound f r a u d n eed

n o t s a t i s t h e h e ig h t e n e d p a r t i c u l a r i t y r e q u i r e m e n t s o f F e d e r a l

Rules o f C i v i l P r o c e d u r e 9 (b) . See In r e Morgan S t a n l e y I n f o .

Fund Secs . L i t i . 592 F. 3d 347 , 359 (2d C i r . 2010) .

Accord ing ly, t h e h e ig h t e n e d p l e a d i n g s t a n d a r d s o f t h e P r i v a t e

S e c u r i t i e s i g a t i o n Re rm Act do n o t a p p l y t o t h e CAC. See

15 U.S.C. 78u- 4 ( b ) (1) (2 ) ; s ee a l s o L i t w i n , 634 F.3 d a t 715 .

To s u r v i v e m ot i on t o s m i s s , P l a i n t i f f s need o n ly show

n e g l i g e n c e unde r S e c t i o n 11 o r S e c t i o n 12 (al (2 ) . I d .

36



37/83


38/83

FWP.

I t em 303 r e q u i r e s t h e d i s c l o s u r e o f a l l known t r e n d s

t h a t have had o r t h a t t h e r e g i s t r a n t r e a so n a b l y e x p e c t s

w i l l have a m a t e r i a l u n f a v o r a b l e imp ac t on

r e v e n u e s . R e g u la t i o n S-K, I t em 303, 17 C.F.R.

229 .303 (a) (3) ( i i ) . Acco rd in g t o t h e SEC's i n t e r p r e t i v e

r e l e a s e r e g a r d i n g I t em 303, "A d i s c l o s u r e du ty e x i s t s where a

t r e n d , demand, commitment, e v e n t o r u n c e r t a i n t y i s bo th

s e n t l y known t o management and r e a so n a b l y l i k e t o have

mat a l e f f e c t s on t h e r e g i s t r a n t ' s f i n a n c i a l c o n d i t i o n o r

r e s u l t s o f o p e r a t i o n . Management ' s s c u s s i o n and An a l y s i s o f

n a n c i a l Cond i t ion and Res t s o f Op e r a t i o n s , S e c u r i t i e s Act

Release No. 6835, 54 Fed. Reg. 22427, 22429 (May 18, 1989)

( 1989 SEC R e l e a s e ) . Severa l s p e c i f i c p r o v i s i o n s i n I tem 303

r e q u i r e d i s c l o s u r e o f f o r w a r d - lo o k in g i n f o r m a t i o n , i n c l u d i n g

where a t r e n d , demand, commitment, e v e n t o r u n c e r t a i n t y i s bo th

[1] p r e s e n t l y known t o management and [2] r e a so n a b l y l i k e l y t o

have m a t e r i a l e f f e c t s on t h e r e g i s t r a n t ' s f i n a n c i a l c o n d i t i o n o r

r e s u l t s o f r a t i o n s . Id . a t 22429; see a l s o Pan ther

P a r t n e r s , 681 F. 3d a t 120 (same). 20 Whether a d i s c l o s u r e i s

r e q u i r e d i s sed on c u r r e n t l y known t r e n d s , e v e n t s , and

20 I t e m 303 e s t a b l i s h e s a s a f e h a r b o r f o r " i n f o r m a t i o n madeb y i s s u e r s p u r s u a n t t o p a r a g r a p h s (a) (4) a n d (5) o f t h i s I t e m b u t n o ts u b s e c t i o n ( a ) ( 3 ) . 17 C . F. R . 2 2 9 . 3 0 3 ( c ) .

38



39/83

u n c e r t a i n t i e s t h a t a r e r e a s o n a b l y e x p e c t e d t o h av e m a t e r i a l

e f c t s [ i ] n c o n t r a s t , o p t i o n a l f o r w a r d - lo o k in g d i s c l o s u r e

i nvo a n t i c i p a t i n g a f u t u r e t r e n d o r e v e n t o r a n t i c i p a t i n g a

l e s s p r e d i c t a b i m pac t o f a known e v e n t , t r e n d o r u n c e r t a i n t y . "

54 Reg. a t 22429 .

I n t e r n a l f o r e c a s t s a r e g e n e r a l l y c o n s i d e r e d " n o t

m a t e r i a l f a c t s t h a t a r e r e q u i r e [ d ] t o be d i s c l o s e d i n a

r e g i s t r a t i o n s t a t e m e n t . " I n r e Facebook , I n c . , IPO Secs . And

D e r i v a t i v e L i t 922 F. Supp. 2d 445, 472 ( " D e r i v a t i v e

Opi n i on o r 11 D e r i v a t i ve Op. ") ( i n t e r n a l q u o t a t i o n marks omi t t ed )

(quo t ing W Term T r u s t 2000, 938 F. Supp. 171 ,

177-78 (S .D.N.Y. 1 9 9 6 ) ) ; s e e a l s o I n r e N Telecom Ltd . Secs .

L i g . , 116 F. Supp. 2d 446, 458 (S.D.N.Y. 2000) ("The f e d e r a l

s e c u r i t i e s laws do n o t o b l i g a t e co m p an ies t o d i s c l o s e t h e i r

i n t e r n a l f o r e c a s t s . " ) ; Rub i t a l Banco 551 F. 3d

1156, 1163 ( 9 t h C i r . 2009) ({" [T]he re i s no d u t y t o d i s c l o s e

income p r o j e c t i o n s a p r o s p e c t u s . " ) ; In r e B u r l i C o at

114 F.3 d 1410, 1432 (3d C i r . 1997)

("Companies a r e n o t o b l i g a t e d e i t h e r t o p ro d u ce o r d i s c l o s e

i n t e r n a l f o r e c a s t s " ) ; Glassman v . C o m p u t e r v i s i o n Co r p .

90 F. 3d 6 1 7 , 6 3 1 ( 1 s t C i r . 1996) {"The f e d e r a l s e c u r i t s l a w s

impose no o b l i g a t i o n upon an i s s u e r t o d i s c l o s e f o r w a r d - l o o k i n g

i n f o r m a t i o n such a s i n t e r n a l p r o j e c t i o n s , e s t i m a t e s o f f u t u r e

39



40/83

r formance , f o r e c a s t s , budge t s , s l a r d a t a . ) (quo t ing

Shaw v. D i g i t a l Equip . Corp . , 82 F.3d 1194, 1209 ( 1 s t C i r.

1996) ) ; Krim v . BancTexas Group, I n c . , 989 F.2d 1435, 1446 (5 th

C i r. 1993) ( [AJn i s s u e r s no g e n e r a l i z e d du ty t o

u n t e e r an economic f o r e c a s t . ) ( i n t e r n a l q u o t a t i o n marks

o mi t t e d ) ; In re Sa les fo rce . com Secs . L No. C 04-03009 JSW,

2005 W 6327481, a t *5 (N.D. Cal . 2005) ( The law imposes no

du ty t o d i s c l o s e i n t e r n a l t s i n t h e c o n t e x t o f an i n i t i a l

p u b l i c o f f e r i n g . ) ; In re Donna Karan I n t ' 1 Secs . L i t No.

97-CV-2011 CBA 1998 W 637547, a t *12 & n.13 (E.D.N.Y.

1998) ( [P] 1 a i n t i f f s e s s e n t i 1y seek t o ho ld [ the i s s u e r ] 1 i Ie

f o r f a i l i n g t o make e c t i o n s conce rn ing p o s t - I P Q . c o s t s .

Se c t i o n s 11 and 12 (a) (2) do not r e q u i r e such fo rward- look ing

d i s c l o s u r e s . ) . The SEC has no t r e q u i r e d a g e n e ra l y t o

d i s c l o s e f u t u r e p r o j e c t i o n s and i n t e r n a l va i ons

because o f concerns t su ch i n f o r m a t i o n can be u n r e l i l e and

m i s i n t e r p r e t e d by s t o r s . In re Ivan F. Boes Secs . L i t i .

825 F. Supp. 623, 635 (S.D.N.Y. 1993) . 2 1

21 Defendan t s argue t h a t the SEC has even d i sc o u r a g e d s s u e r s from d i s c l o s i n gp r o j e c t i o n s i n advance o f an IPO by not a p p ly in g a s a f e h a r b o r s ion t oIPOs. Def. Mem., a t 30 .) The SEC conc : uded t h a t the s a f e h a r b o r sh o u ldno t apply because engaging i n IPOs a re _y u n t e s t e d andt h u s a l t o produce u n c e r t a i n Sec . O ffe r ingReform, S e c u r i t i e s Act Release No. 8591, 70 Fed. 44739 (Aug. 3,2005) ( t h e 2005 SEC Releas e ) ; acco rd L e t t e r o f Mary r o , SEC C t a i rt o Comm. On Overs i and Go v ' t Reform, O.S. House o f . , a t 23 (August 23,2012) .

40

http:///reader/full/Salesforce.comhttp:///reader/full/Salesforce.com


41/83

I tem 303 s i m i l a r l y d o es not o b l i g a t e companies t o

d i s ose i r i n t e r n a l f o r e c a s t s . See, e . g . , In re

Authent Secs . Li t i 2 0 0 9 W 7 5 5 3 60 , a t * 3

(S.D.N.Y. 2009) , a f f ' d i n r e l e v a n t p a r t , 369 F. App 'x 260, 265

66 (2d r . 2010) (no du ty under I tem 303 t o d i s c l o s e t h a t

revenue wou l i k e l y f a i l t o meet nonpub l ic revenue t a r g e t s ) ; In

re Donna Karan 1998 W 637547, a t *10-12 & n.12 (company was

not r e q u i t o make p r o j e c t i o n s conce pos t - IPO

c o s t s , d e s p i t e 1 ion t h a t a n e g a t i v e c o s t s - s a s t r e n d ,

under I tem 303, a t t h e t ime o f t h e IPO ) . Nor does a

company have a 1 du ty t o d i s c l o s e s t o i n t e r n a l

p r o j e c t i o n s . See In r e Worlds o f Wonder Secs . t i g . , 35

F.3d 1407, 1419 C i r . 1994) ( r e j e c t i n g Sec t 11 c l a i m

based on t h e i l u r e t o d i s c l o s e t h e e x t e n t t o which f i r s t

q u a r t e r s a l e s 1 beh ind i n t e r n a l p r o j e c t i o n s ) ;

Glassman v Formica 90 F.3d 617, 631 (1s t C i r . 1996)

( P l a i n t i f f s ' nond isc su r e c l a im s f a i l because t h e y se t h e i r

a l l e g a t i o n s s o l e l y on d i s c r e p a n c i e s between a c t u a l (but

undi sc losed) i n t r a - q u a r t e r l y i n fo rma t i o n and [ the , s

u n d i sc l o se d i n t e r n a l j e c t i o n s . ) ; Steckman v. Har t Brewing,

I n c . , C i v i l No. 96-1077-K, 1996 W 881659, a t *4 (S.D. Cal .

1996) ( [C]ompanies have no du ty t o d i s c l o s e i n t r a q u a r t e r

r e s u l t s , even i t h o se r e s u l t s a r e l o wer t h a n t h e company ' s

i n t e r n a l p r o j e c t i o n s . ) , a f f ' d , 143 F.3d 1293 (9 th C i r. 1998) .

41



42/83


43/83

omis s ion t h a t a r e a so n a b l e i n v e s t o r would have c o n s i d e r e d

s i g n i c a n t i n making inves tmen t d e c i s i o n s tw in ,

634 F.3d a t 716-17 (quo t ing Bas ic Inc . v . Levinson, 485 U.S.

224, 236, 108 S. Ct. 978, 99 L. Ed. 2d 194 (1 9 8 8 ) ; Ganino v .

t i z e n s U t i l s . Co. , 228 F.3d 154, 161-62 (2d C i r . 2000) ) .

[TJhere must be a s u b s t a n t i a l l i k e l i h o o d t h a t t h e d i s c l o s u r e o f

t h e o m i t t e d f a c t would have been v iewed by t h e r e a so n a b l e

i n v e s t o r as hav ing s i g n i f i c a n t l y a l t e t h e t o t a l mix o f

i n f o r m a t i o n made a v a i l a b l e . Id . a t 717 (quo t ing Ganino, 228

F.3d a t 162) .

The Second C i r c u i t r e c e n t l y dec ided two c a s e s , tw in

and Pan ther P a r t n e r s , t h a t p r o v i d e f u r t h e r i l l u m i n a t i o n on t h e

d i s c l o s u r e o b l i g a t i o n s u n d er I t em 303. P l a i n t i f f s i n Li twin

a l l e g e d t h a t defendan t Blacks tone v i o l a t e d S e c t i o n s 11 and 12 o f

t h e S e c u r i t i e s Act because t h e r e g i s t r a t i o n s t a t e m e n t and

p r o sp e c t u s fo r i t s I P i l e d t o d i s c l o s e t h a t (and t h e e x t e n t

t o which) s f u t u r e revenues were expec ted t o be impacted by

c e r t a i n d ev e lo p men t s concern ing i t s b u s i n e s s , i n c l u d i n g : ( i l

downward t r e n d s i n t h e r e a l e s t a t e marke t ; ( i i ) a s h i f t towards

a more sky s t r a t e g y by a s u b s i d i a r y company, FGIC, which

i n s u re d mortgage-backed s e c u r i t i e s ; and ( i i i ) a n o t h e r

s u b s i d i a r y , F r e e s c a l e , had l o s t s b i g g e s t cus tomer. See 634

F.3d a t 718-19 .

43



44/83

The Second t u p h e l d t h e p l a i n t i f f s ' c l a i m s and

h e ld t h a t I t em 303 r e q u i more t h a n t h e mere i i f i c a t i o n o f

t r e n d s t h a t were o c c u r r i n g i n t h e d e f e n d a n t ' s b u s i n e s s . The

c o u r t n o t e d t h a t " r e l e v a n t q u e s t i o n r I t em 303 i s

wh eth er [ the company] r e a s o n a b ly e x p e c t s t i m pac t t o be

m a t e r i a l . L i t w i n , 634 F. 3d a t 719.

[T]he key i o n t h a t p l a i n t i f f s a s s e r t s h o u l dhave been o sed i s w h e t h e r, and t o what e x t e n t ,t h e p a r t i known t r e n d , e v e n t , o r u n c e r t a i n t ym i gh t have r e a s o n a b ly ex p e t o m a t e r i a l l ya f f e c t B t o n e ' s i n v e s tm e n t s . t h i s p o t e n t i a lf u t u r e t was c e r t a i n l y n o t knowledge .and t h u s c a n n o t be c o n s id e r e d r t t h e t o t a l mixo f i n rma t ion a l r e a d y a v a i l a b l e t o i n v e s t o r s . Again ,t h e fo cu s o f p l a i n t i f f s ' c l a i s t h e r e q u i r e dd i s c l o s u r e s unde r I t em 3 0 3 - p l a i f f s a r e n o t s e e k in gth e s s u r e o f t h e mere o f B l a c k s t o n e ' si n v e s t m e n t i n FGIC, o f t h e downward t r e n d i n t h e r e a le s t a t e mar t , o r o f F r e e s c a ' s l o s s o f i t s e x c l u sc o n t r a c t w i t h Mo to ro l a . R a t h e r, p i n t i f f s c l a i m t h a tBl ac was r e q u i r e d t o e t h e manner i nwhich t h o s e then-known e v e n t s , o ru n c e r t a i e s m i gh t r e a s o n a b ly be e x p e c t e d t omat a l l y i m pac t B l a c k s t o n e ' s f u t u r e r e v e n u e s .

Id . a t 718 19 .

In h o ld in g f o r t p i n t i f f , t h e c o u r t emphas ized

t h a t B l a c k s t o n e ' s r e a l e s t a t e segment p l a y e d a s i g n i f i c a n t

r o l e B l a c k s t o n e ' s s and t h a t a l l e g e d

44



45/83

m is s t a t e m e n t s and o m i s s i o n s r e g a r d i n g B l a c k s t o n e ' s r e a l e s t a t e

"were q u a l i t a t i v e l y m a t e r i a l because t h e y masked p o t e n t i a l

change i n e a r n i n g s o r o t h e r t r e n d s . I d . a t 722 . "[A] 11 I t em

303 r e q u i r e s i n o r d e r t o t r i g g e r d i s c s u r e o b l i g a t i o n [ i s ]

known t r e n d t h a t [de fendan t ] r e a s o n a b l y e x p e c t e d would

m a t e r i a l l y a f f e c t i t s i n v e s tm e n t s and r e v e n u e s . L i tw in , 634

F.3 d a t 721.

Ap p ro x imate ly one y e a r l a t e r , t h e Second C i r c u i t

u p h e l d t h e L i tw in p a n e l ' s d e c i s i o n i n P a n th e r P a r t n e r s . In

P a n t h e r P a r t n e r s , t h e p l a i n t i f f s a l l e g e d t h a t t h e d e f e n d a n t s

f a i l e d t o d i s c l o s e t h e e x t e n t o f t h e imp ac t o f known p r o d u c t

d e f e c t s on t h e company 's f i n a n c i a l r e s u l t s i n advance o f

s e c o n d a r y o f f e r i n g . See 681 F. 3 d a t 11 4 -1 6 . The d e f e n d a n t s

co n ten d ed t h a t t h e y had s a t i s f i e d I t em 303 by d i s c l o s i n g t h e

f a c t t h a t i s s u e r ' s p r o d u c t s f r e q u e n t l y c o n t a i n d e f e c t s and

bugs ;" t h a t " [ i ] n t h e p a s t we have e x p e r i e n c e d , and may t h e

f u t u r e e x p e r i e n c e , d e f e c t s and bugs i n o u r p r o d u c t s ; and t h a t

n [ i ] f any o f our p r o d u c t s c o n t a i n s d e f e c t s [ t h a t ] c o u ld harm o u r

a b i l i t y t o r e t a i n e x i s t i n g cus tomers and a t t r a c t new c u s to m e r s . "

See i d . a t 117.

In h o ld in g t h a t t h e p l a i n t i f f s d i d a d e q u a t e l y p l e a d

v io i o n o f I t em 3 0 3 ' s d i s c l o s u r e o b l i g a t i o n s , t h e Second

45



46/83

Ci t l o o k e d n o t j u s t a t t h e omis s ion a l l e g e d by p l a i n t i f f s

b u t a l s o a t t h e c i r c u m s ta n c e s s u r r o u n d in g t h e o m i s s i o n :

e b e l i e v e t h a t , viewed i n t h e c o n t e x t o f I t em 3 0 3 ' sd i s c l o s u r e o b l i g a t i o n s , t h e d e f e c t r a t e [ t h e a l l e g e do m is s io n ] , i n a vacuum, i s no t what i s a t i s s u e .Rathe r t i s t h e manner i n which u n c e r t a i n t ysu r round ing t h a t de r a t e , g e n e r a t e d by ani n c r e a s i n g f low o f h i g h l y n e g a t i v e f o r m a t i o n fromkey cus tomers , m i gh t r e a s o n a b ly be e x p e c t t o have am a t e r i a l impact on f u t u r e r e v e n u e s .

Id . a t 120.

In i t s a n a l y s i s , t h e r t n o t e d t h a t t h e

[ r ] e g i s t r a t i o n [ s ] t a t e m e n t ' s g e n e r i c c a u t i o n a r y l anguage

was i ncomple te and, c o n s e q u e n t l y, d id no t f u l f i l l [ t h e i s s u e r ' s ]

d u t y t o i n f o r m t h e i n v e s t i n g p u b l i c o f t h e p a r t i c u l a r ,

f a c t u a l l y - b a s e d u n c e r t a i n t i e s o f which t was aware o f i n t h e

wee ks l e a d i n g up t o [s] e c o n d a r y [ ] f f e r i n g . I d . a t 122 .

The c o u r t n o t e d t h a t t h e known u n c e r t a i n t i e s r e l a t e d t o t h e

de s cou ld have m a t e r i a l l y imp ac t ed r e v e n u e s : The company 's

r e p r e s e n t a t i o n t h a t t produc t ' f r e q u e n t l y c o n t a de s a n d

bugs ' was i ncomple te and . d id n o t f u l f i l l [ t h e company 's ]

du ty t o i n f o r m t h e i n v e s t i n g p u b l i c o f t h e p a r t i c u l a r ,

f a c t u a l l y - b a s e d u n c e r t a i n t s o f which was aware i n t h e weeks

l e a d i n g up t o t h e Seconda r y O f f e r i n g . I d .

46



47/83

In d e c i d i n g f o r p l a i n t i f f s i n L i tw in and P a n th e r

P a r t n e r s , t h e Second C i r c u i t emphasi zed t h e i s s u e r ' s knowledge

o f bo th t h e t r e n d and u n c e r t a i n t i e s s u r r o u n d in g t h e i s s u e

d i s c l o s e d i n i t s r e g i s t r a t i o n s t a t e me n t . The opera ve i l u r e

by t h e i s s u e r i n P a n th e r P a r t n e r s was no t i t s omis s ion o f t h e

p o s s i b i l i t y o f t h e d e f e c t s and bugs i n i t s p r o d u c t s b u t t h e

omis s ion o f t h e company ' s knowledge r e g a r d i n g t h e u n c e r t a i n t y o f

t h e i s s u e . See i d . a t 121-22 ( n o t i n g t h a t t h e i s s u e r was aware

o f t h e ' u n c e r t a i n t y ' o f p o s s i b l e r e t u r n s r e l a t e d t o i t s

p r o d u c t ' s d e f e c t s and t h a t such ' known u n c e r t a i n t i e s ' cou ld

m a t e r i a l l y imp ac t r e v e n u e s ) .

Taking Li twin and P a n th e r P a r t n e r s t o g e t h e r , an i s s u e r

has a du ty t o d i s c l o s e any t r e n d , e v e n t o r u n c e r t a i n t y t h a t i s

known and e x i s t i n g a t t h e t ime o f t h e IPO t h a t was r e a so n a b l y

l i k e l y t o have a m a t e r i a l impact on t h e i s s u e r ' s f i n a n c i a l

c o n d i t i o n . Pan ther P a r t n e r s , 681 F. 3d a t 121 (quo t ing L i tw in

6 4 F.3d a t 716) . Moreover, an i s s u e r a l s o h as a du ty t o

d i s c l o s e whe the r, and t o what e x t e n t t h a t known t r e n d , e v e n t

o r u n c e r t a i n t y t h a t might r e a so n a b l y be e x p e c t e d t o m a t e r i a l l y

impact f u t u r e r e v e n u e s . P a n th e r P a r t n e r s , 681 F. 3d a t

121 (quo t ing L i tw in , 6 4 F.3d a t 716) .

47



48/83

T h e s commentary on I tem 303 f u r t h e r s u p p o r t s t h i s

read ing o f Li twin and P a n th e r P a r t n e r s . In i t s 1989 SEC

Release , t h e S s t a t e d t h a t i f n[m]anagement i s unab le t o

de te rmine t h a t a m a t e r i a l e f f e c t i s no t r e a so n a b l y l i k e l y

t o occu r, II t h e n MD&A d i s c l o s u r e o f t h e e f s o f [ t h e known

t r e n d , development o r u n c e r t a y] , q u a n t i f i e d t o t h e e x t e n t

r e a so n a b l y p r a c t i c a b l e , would be r e q u i r e d . 54 Fed. Reg. a t

22,430; s e e a l s o 2003 SEC Release , 68 Fed. Reg. a t 75 ,0

( Quant i t a t i ve d i s c l o s u r e may be i r e d t o e x t e

Facebook IPO Lawsuit

Documents

Transcript of Facebook IPO Lawsuit