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Zuckerberg, Morgan Stanley sued over Facebook IPO

Facebook Inc Chief Executive Mark Zuckerberg, and several banks led by Morgan Stanley were sued by shareholders, who claimed the defendants hid the social networking leader's weakened growth forecasts ahead of its $16 billion initial public offering.

The defendants were accused of concealing from investors during the IPO marketing process "a severe and pronounced reduction" in Facebook revenue growth forecasts, resulting from increased use of its app or website through mobile devices.

The lawsuit was filed in the U.S. District Court in Manhattan, according to a lawyer for the plaintiff.

"We believe the lawsuit is without merit and will defend ourselves vigorously," a Facebook spokesperson said Wednesday.

A day earlier, a similar lawsuit by a different investor was filed in a California state court, according to a law firm involved in that case.

In the New York case, shareholders said research analysts at several underwriters had lowered their business forecasts for Facebook during the IPO process, but that these changes were "selectively disclosed by defendants to certain preferred investors" rather than to the public generally.

"The value of Facebook common stock has declined substantially and plaintiffs and the class have sustained damages as a result," the complaint said.

Representatives of Facebook and Morgan Stanley did not immediately respond to requests for comment.

Facebook shares fell 18.4 percent from their $38 IPO price in the first three days of trading, reducing the value of stock sold in the IPO by more than $2.9 billion. In early trade Wednesday, the shares had clawed their way back a bit, rising about 4 percent.