Facebook class action gets green light from US judge

A US judge has given the green light to two class actions alleging that social network giant Facebook hid concerns about its growth forecasts ahead of the company’s stock market debut in 2012.

The company is being accused of hiding internal projections ahead of the IPO on how growth in mobile devices might dent its prospects.

Investors are claiming they lost money as a result of buying shares at inflated prices related to the initial public offering that raised $16bn (£11bn).

Facebook stock was at $38 when it started trading on 18 May, but by the beginning of September, the shares had almost halved in value.

They remained below the IPO price for over a year, but are currently trading above $107.

Founder and chief executive Mark Zuckerberg was among those named as defendants in the case, along with chief operating officer Sheryl Sandberg and other officials.

Facebook, which is appealing the decisions to certify the class actions, said they were "without merit" and against legal precedent.

In a Manhattan court ruling, US district judge Robert Sweet said Facebook presented "an impressive amount of evidence" to suggest shareholders knew how mobile usage would affect revenue.

However, he rejected the group’s argument that investors should pursue claims individually, which could prove costly and reduce the sums recovered.

Sweet said that given the size of the case, allowing two subclasses added “more weight to the predominance of common questions and answers, practically negating the individualised questions raised”.