A group of institutional investors led by North Carolina Retirement Systems, Raleigh, was named lead plaintiff in an investor lawsuit against Facebook and its IPO underwriters, which include Morgan Stanley (MS), J.P. Morgan Securities and Goldman Sachs & Co.
U.S. District Court Judge Robert Sweet in New York granted lead plaintiff status on Thursday to a group identified as the Institutional Investor Group, which includes the North Carolina Department of State Treasurer on behalf of the $75.9 billion NCRS; the $11.3 billion Arkansas Teacher Retirement System, Little Rock; the $2 billion Fresno County (Calif.) Employees' Retirement Association and Banyan Capital Master Fund, a middle-market buyout fund.
Together, the group's members claim to have lost $7.2 million from the May 18 Facebook IPO, with North Carolina's loss estimated to be $4.1 million and Banyan's, $1.7 million. Arkansas Teachers and Fresno County each lost less than $1 million.
In his order, Mr. Sweet said the group proved to have the largest financial interest in the litigation based the number of shares purchased during the class period; number of net shares purchased during that period, total funds expended and approximate loss suffered.
Between May 18 and May 22, North Carolina bought 685,737 shares of Facebook common stock for $26 million and sold 67,600 shares for $2.8 million, under a loss calculation method known as first-in, first-out and last-in, first-out.
The judge also named New York law firms Bernstein Litowitz Berger & Grossmann and Labaton Sucharow as co-lead counsels.
Bernstein Litowitz attorney Gerald Silk said in an interview that the judge's ruling was important because “the lead plaintiff gets to run the litigation. The lead plaintiff gets to make the decisions about how it goes forward.”
Calls to the pension plans were not returned by press time.
At the time that North Carolina filed for lead plaintiff status Aug. 8, state Treasurer Janet Cowell said in an e-mailed statement that “Facebook and its underwriters told one thing to the public and shared the real facts with only a few select investors on Wall Street.”