Facebook founder Mark Zuckerberg is the target of a class action lawsuit initiated by investors in the social media network’s IPO.
The suit is the second one of its kind in the last two weeks.
Plaintiffs contend that Zuckerberg and chief underwriter Morgan Stanley knew there were flaws in the Facebook business model. According to the suit, the growing number of mobile app users accessing Facebook would not allow for the ad support that is crucial to the value of a website like Facebook.
The mobile applications generally don’t have the advertising, and selected investors were made aware that mobile access to Facebook could diminish revenue streams while others were not privy to the forecast.
According to the lawsuit, Zuckerberg also dumped much of his Facebook stock during the IPO, which was valued at around $38.
JPMorgan and Goldman Sachs are also named in the
Facebook is the world’s largest internet social network. It’s success has allowed Zuckerberg to amass about $15 billion in personal wealth.