Facebook IPO Nosedive Gets Facebook IPO Class Action Lawsuit

It's been more and more apparent that there was some shady—though not necessarily illegal!—activity from Facebook's bank advisors in the lead-up to the company's IPO last week. And now, investors who got the shaft are trying to get their money back through the courts.

At issue: Morgan Stanley, Facebook's IPO sherpa, was encouraging its client to up its initial price while at the same time cutting its estimates for Facebook's future financial success. What's worse, they managed to whisper that last bit into the ears of their giant institutional clients while managing to keep it obscured from Joe Investor. Who is now, understandably, pissed.

As Business Insider reports, Facebook shareholders have filed a class action suit against both Facebook and Morgan Stanley, claiming that Facebook's prospectus—basically an overview of the company's financial health and various risks related to investing—contained false information. A serious allegation, but one that seems more and more likely to be true by the day. Adding to Facebook's woes: The case will be handled by Robbins Geller, the same firm that took down Enron for $7 billion.

It's too early in the proceedings to know whether this would actually ever go to court (unlikely!) or how much Facebook would end up on the hook for in a settlement (lots!). But what is clear is that there are a lot of unhappy investors out there who allegedly got taken for a ride. Good for them for wanting to get to the bottom of it. [BusinessInsider]