Shareholders who participated in Facebook’s (NASDAQ: FB) botched 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.
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.
Finkelstein Thompson LLP has spent over three decades delivering outstanding representation to institutional and individual clients in financial litigation, and can be reached at 866-377-1050.
Lovell Stewart Halebian Jacobson LLP has enjoyed unmatched success in prosecuting exchange-based antitrust claims, securities manipulations schemes, and investment company violations. To learn more about Lovell Stewart Halebian Jacobson LLP please visit its website at www.lshllp.com or call its New York City office at 212-608-1900.