[JURIST] The US District Court for the Southern District of New York [official website] in an opinion [text, pdf] made public on Tuesday, decided that two shareholder class actions against Facebook Inc. [corporate website], alleging that the company hid concerns about its growth, could proceed. The shareholders allege [Reuters report] that in 2012, a year before the release of the initial public offering (IPO), Facebook Inc. discovered that the increasing migration of consumers from computers to mobile devices sharply decreased the amount of ad revenue the company could make as fewer ads were displayed in the mobile format. The company reacted by cutting projected revenue figures, however it did not disclose this change, considered to be significant, to the Syndicate Analysis. Facebook is appealing the decision.
Many large corporations have been the subject of large lawsuits over the past year. In September the US Department of Justice (DOJ) [official website] announced [JURIST report] that General Motors (GM) had reached a deal to accept charges of wire fraud and a $900 million fine for allegedly concealing information about ignition-switch defects for more than a decade. In March a judge for the US District Court for the Southern District of New York gave final approval [JURIST report] to a $970.5 million settlement for shareholders of the insurance giant American International Group (AIG) to settle claims that shareholders were misled about the subprime mortgage exposure that led to a liquidity crisis and over $180 billion in federal bailouts. Also in March the DOJ announced [JURIST report] a $1.2 billion settlement agreement with Toyota for misleading customers and US regulators.