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Facebook, Zuckerberg Sued Over IPO
mrquagmire writes with this snippet from CNET: "Facebook shareholders have sued the social network, CEO Mark Zuckerberg, and a number of banks, alleging that crucial information was concealed ahead of Facebook's IPO. The lawsuit, filed in the U.S. District Court in Manhattan this morning, charges the defendants with failing to disclose in the critical days leading up to Friday's initial public offering 'a severe and pronounced reduction' in forecasts for Facebook's revenue growth, as users more and more access Facebook through mobile devices, according to Reuters, which cited a law firm for the plaintiffs."
It wasn't because of taxes, it was because of fraud? hmm
I'm god, but it's a bit of a drag really...
Seriously. The P/E was stupidly high before. Now, even under the revised projections, it's slightly stupidly higher. The stock was due to tank in any case. As we used to say on the playground, "NO DO-OVERS!"
The suit alleges that only big time investors were apprised that rising use of mobile would affect revenue. This was known to everyone weeks ago, well before the IPO. here's an article from a week prior to the IPO all about the mobile risks
http://www.telegraph.co.uk/technology/facebook/9257232/Facebook-issues-revenue-warning-over-mobile-growth.html
A) Saverin hasn't been involved in the running of facebook in years, and certainly had nothing to do with the IPO, so he will not be the target of this lawsuit in any way.
B) He did give up his citizenship for tax reasons, but not the tax reasons everyone thinks. He cannot and will not escape any taxes on money he made from the IPO, he earned those shares when he was a US citizen and will pay full taxes on them. He renounced his citizenship because he hasn't lived in the US in 4 years and was tired of paying taxes to the US for money he was making working in Singapore, which isn't that unreasonable.
He renounced his citizenship because he hasn't lived in the US in 4 years and was tired of paying taxes to the US for money he was making working in Singapore, which isn't that unreasonable.
The USA is actually the only first world country that even taxes their people while they are living overseas. For example in my country you don't need to pay any taxes back home if you live in another country for more than 6 months.
There is real reason to sue. Partway through the roadshow a facebook exec (an insider) told analysts to dial back earnings growth estimates (provided insider information). This last-minute insider information was made available to institutional buyers of the IPO, but not to the retail buyers. The institutional buyers coalesced around a buy price of 32 dollars, while the retail buyers came in at 40 dollars. Now, post IPO facebook has stopped falling, hovering at, you guessed it, very near 32. The retail investors got screwed, likely illegally.
details here
But isn't Canada just one of the states of the United States?
And oil and water, bitches! Don't even think about comin' up here and *liberating* us.
Seriously, RTFA:
So, Wall Street got told one set of numbers, and everyone else got told another set.
There were two classes of buyers (it is claimed) -- those who were given the actual estimates, and the rest of us.
So, that would be illegal according to SEC rules.
If all of this information had been made public, and the people lost their money (like some of us expected they would), that would be one thing. But in this case, there was some material omissions.
That's illegal. (At least, if there actually were two different sets of numbers provided to investors.)
Facebook was overvalued, that's true. But it was likely even more overvalued than most were led to believe, which means the institutional investors had an unfair advantage in selling it off to the suckers -- they knew just how much more overvalued it really was. They got to short the stock for free basically.
Lost at C:>. Found at C.
Nope, I'm a Canadian who moved to the US. I had to do dual income taxes the first year because I spent a partial year in both countries. After that, it was only US taxes. If I were to actually make income in Canada then it would be a different story, I believe, but I can make as much as I want in the US and not pay income tax to Canada.
You're going to need to back that one up. I believe Canada does the same thing.
False. Canada taxes its residents. Canada does not tax its citizens, unless they are also residents of Canada.
Read the explanation from the Canada Revenue Agency:
http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html
If you want a more detailed explanation of how your residence is determined for tax reasons, you should read Interpretation Bulletin IT-221, Determination of an Individual's Residence Status:
http://www.cra-arc.gc.ca/E/pub/tp/it221r3-consolid/it221r3-consolid-e.html
So I'm afraid I don't think what you say is true.
ME TOO!!!
Not quite that simple. The complaint is that revenue projections were selectively disclosed to insiders. That is a violation of SEC regulations.
You are correct. IF inside information was tipped and not properly released then there is a serious legal problem for some folks here. One cannot trade on inside (not public) information no matter what the source, no matter what the company.
My guess here is some green horn insider at Facebook spilled the beans by passing improperly vetted inside information to a select few. This tipped off the underwriters, who then traded the stock to their advantage. There will be two issues for the legal system to sort out. First, if anybody broke the insider trading laws (like Martha Stewart did) by tipping or receiving inside information and trading. Both the tipper and the one being tipped are subject to criminal prosecution for violating SEC rules so there could be a bunch of folks at risk here. Second there will be the civil case of the investors who traded without having the same access to information as others. They will claim that Facebook improperly handled inside information and should pay their losses.
Both cases seem to have merit.
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
It's amazing how complicated our tax code is yet we can't provide basic human needs (IMHO) to our citizens.
Oh, we can. We just decided that "teh socializim is ebil!!11!" and that money is much better used on endless clusterfucks of wars to "bring freedom" while domestically creating a police state, and corporate blowjobs.
Face it. If you want the government to do something right, you have to tell them to make a left turn.
Here's a reference. Only the US and Eritrea are this dumb.
I've lived abroad for more that 20 years, and I am very tired of filing an ever-increasing number of forms with the US authorities. It's not only the IRS, you also have to file separate forms with a separate agency detailing your foreign bank accounts - which, frankly, is none of their business.
The US does allow a deduction against foreign income, but this is worth less and less as the value of the dollar continues to crash. Depends what currency your country uses, of course, but the US doesn't care or make any allowance for that. In my case, the dollar has lost fully half of its value in the last few years. Turn that around: from the IRS point of view my salary has doubled (even though it actually hasn't). Great.
Add to that the pressure the US is applying to foreign banks, in an attempt to rake in money. I won't go into details here, but the US behavior here is closer to blackmail than to any sort of legal proceeding. The result is that foreign banks now ask you up front "are you subject to US taxes?" If you answer "yes", many simply refuse to do business with you. The US government is making it difficult for normal Americans to get on with their lives.
I have also had enough. I will be renouncing my citizenship before the year is out.
Enjoy life! This is not a dress rehearsal.
They didn't so much "gather". Everybody else just froze to death.