Things get worse for Facebook post IPO as shareholders sue

Looking back, the technical glitches that delayed Facebook’s IPO are starting to seem like an omen.

After seeing its shares plummet more than 10% on its second day of trading, the social network — along with its financial underwriters — is being sued by its shareholders.

According to Reuters, the shareholders claim that Facebook, along with banks like Morgan Stanley hid the social network’s weakened growth forecasts ahead of the IPO.

The suit was filed today in a New York Court and comes hot on the heels of a similar suit which was filed in California on Tuesday.

The complainants in the New York case say that several investors had dramatically reduced their expectations for the IPO but had “selectively disclosed by defendants to certain preferred investors” rather than to the general public.

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

The fall in individual stock prices means that the shares Facebook released in the IPO have decreased by more than US$2-billion in value.