The legal action followed a Reuters report that alleged analysts at lead underwriter Morgan Stanley(MS) received privileged financial information. A separate Reuters report showed Morgan Stanley and three other major underwriters -- Goldman Sachs(GS), JPMorgan (JPM)and Bank of America(BAC) -- reduced their earnings outlooks for Facebook to strikingly similar levels ahead of the IPO.
Facebook said the suit was "without merit," and Morgan Stanley said it followed "the same procedures for the Facebook offering that it follows for all IPOs."
But it was only the first of many shareholder suits bearing a variety of allegations, including that Facebook didn't disclose enough about its revenue weakness before the IPO. Other filings targeted Nasdaq for its technical problems.
Scores of lawsuits have been filed over the past year, including one in March, and their status varies. More than 50 cases were consolidated to be heard by U.S. District Judge Robert Sweet in Manhattan. Sweet dismissed a handful of the cases in February, but most are still being considered.