A swarm of securities class action law firms have been bad mouthing each other and their clients as they jostle for position of lead plaintiff in a class action lawsuit related to the lackluster Facebook IPO. Civitas has taken the spurious claims of pugilistic legal underdogs, Robbins Geller Rudman & Dowd, as evidence of "a sordid affair" that "underscores the need for North Carolina to convert to a 401(k) style retirement plan". Hardly.
North Carolina Retirement Systems (NCRS) run by State Treasurer Janet Cowell is one of a group of plaintiffs that represent the largest losses in the case. NCRS lost $4 million after investing in the IPO. At the heart of the case is the claim that Facebook gave rosier earnings projections than were warranted, that Facebook knew revenue growth would decline with increased use of mobile devices, that Facebook shared these concerns with its underwriters who in turn shared the lower forecasts only with select investors.
The law firm trash talking the NCRS as a lead plaintiff claims a conflict of interest in that Erskine Bowles, a director of Facebook and of lead underwriter Morgan Stanley, was a contributor to the campaign of Janet Cowell, State Treasurer also sole trustee of NCRS.
The irony in this claim of "crippling defects" in the plaintiffs case, and Civitas' retelling, is that NCRS did not obviously benefit from any insider knowledge, hence the lawsuit. Bernstein Litowitz Berger & Grossmann, attorneys for NCRS and other major palintiffs submitted an ititial response to Robbins Geller Rudman & Dowd, politely smacking them down. As noted in the Reuters article by legal writer Alison Frankel:
"Look for a more forceful response to Robbins Geller from North Carolina in the reply briefs due next week."
The Civitas spin is a cherry-picked cheap shot. Perhaps by "sordid affair" writer Balfour means to imply an improbable double-con that the State Treasurer knew about the earnings forecast and bought the stock anyway to benefit Bowles. In fact State Treasurer Janet Cowell is zealously guarding and growing NC retirement assets in a way that few individual investors in 401(k) retirement plans could even hope to achieve.
Republicans have plenty of material to attack Democrats but that doesn't stop the propaganda labs at Civitas and AFP from inventing new recipes to feed us stale tea party leftovers.
BlueNC is dedicated to making North Carolina a more progressive and prosperous state. If your intention is to disrupt this effort, please find somewhere else to express your opinions.