The class action complaint alleges that Facebook failed to disclose to the investing public the material information that the company was experiencing, and anticipating, a significant drop in revenue due to an increase of users accessing Facebook through mobile devices. According to news reports, this lower revenue projection was selectively released by underwriter banks to only certain large investor clients and not included in the Registration Statement

IPOs or initial public offerings are among the most exciting and closely followed events in the stock market. Although the excitement has cooled somewhat since the frenzy of the late 1990s when anyone with an idea that involved the word “Internet” could raise millions of dollars, IPOs still raise the market’s collective blood pressure.
IPOs mark the transition of a company from a privately held to publicly held firm. Every incorporated business issues stock, however there are usually just one, two or a few stockholders, since most businesses start out small.
These companies can’t sell stock to the general public beyond a small number of investors. If a company wants to raise a significant amount of capital without going into debt, one of the ways is to sell stock to the public.
SEC
Before a company can do this, it must register with the SEC (Securities and Exchange Commission) and prepare a public offering. This offering includes a prospectus and a number of other legal documents.
The prospectus is the accounting and legal equivalent of taking your clothes off. Everything good and especially bad or risky about the company, the senior staff, and majority stockowners is reported in the prospectus for the world to see.
The company contracts with an investment bank or banks to underwrite or handle distribution of the shares it wants to sell. The underwriters and the company agree on an opening price