Case 1:12-cv-07586-RWS Document 209 Filed 06/01/21 Page 1 of 4
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`______________________________________________X
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`In re FACEBOOK INC. IPO SECURITIESAND
`DERIVATIVE LITIGATION
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`______________________________________________X
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`MDL No. 12-2389 (CM)
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` This document relates to the
` Consolidated Securities Action:
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`No. 12-cv-4081, 4099, 4131,
`4131, 4150, 4157, 4184, 4194,
`4215, 4252, 4291, 4312, 4332,
`4360, 4362, 4551, 4648, 4763
`4777, 5511, 7542, 7543, 7544
`7546, 7547, 7548, 7550, 7551
`7552, 7586, 7587
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`DECISION AND ORDER DISPOSING OF OBJECTIONS
` AND APPROVING PLAN OF DISTRIBUTION
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`McMahon, J.:
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`Before the court is Lead Plaintiffs’ Motion for Approval of Distribution Plan (Docket
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`#611), along with several objections that have been lodged by Facebook shareholders who believe
`they are entitled to receive a distribution from the common settlement fund.
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`There were originally 58 Disputing Claimants. Notice was sent to all 58 (Document #618).
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`Each Disputed Claimant was advised that the court would accept additional submissions so it could
`rule on any Disputed Claims no later than April 30, 2021.
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`Five of the Disputed Claimants responded to Lead Counsel. A sixth responded directly to
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`the court.
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`Three of the Disputed Claimants (James P. DeFranco, Jr., Thomas Kapusta, Shashadhar
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`M. Mohapatra) have withdrawn their objections.
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`Three of the Disputed Claimants (Maritza Fischle-Epstein, Jordan A. Blitt and Dyan C.
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`Dow) are pursuing their objections. Lead Plaintiffs have filed explanations about the rejection of
`these three claims with the court.
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`No other Disputed Claimant has responded to the court’s notice.
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`Case 1:12-cv-07586-RWS Document 209 Filed 06/01/21 Page 2 of 4
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`The court’s rulings on the three disputed claims whose claimants submitted material in
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`response to the court-ordered notice are as follows:
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`Maritza Fischle-Epstein: Ms. Fischle-Epstein purchased Facebook common stock on May
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`18, 2012, at a price of $42 per share. She still held all 100 shares at the close of trading on February
`23, 2018. Pursuant to the Plan of Allocation (¶67(E)), shares still held as of the close of trading on
`that date were deemed to have been sold at a price of $183.29, and her gain calculated at that price
`less her purchased price. Ms. Fischle-Epstein thus recognized a gain on her Facebook investment
`of over $14,000. As she sold no Facebook shares during the period covered by the settlement, she
`suffered no “Net Recognized Loss Amount” to deduct from her “deemed” gain at the close of the
`class period. She is, therefore, ineligible for any recovery and I see no error in A. B. Data’s
`evaluation of her claim. The additional material that she provided to the court does not alter this
`conclusion; her contention – that she is owed $4 per share because she paid $42 rather than $38
`per share on the day she purchased the stock, due to the volume of trading on that day – does not
`qualify her for participation in the settlement fund.
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`Jordan Blit: Mr. Blit’s situation is identical to Ms. Fischle-Epstein’s. He, too, purchased
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`100 shares of Facebook at $42 per share on February 18, 2012; he, too, still held the stock on
`February 23, 2018. Therefore, he is not entitled to participate in the settlement. In his submission
`to the court, Mr. Blit claims that he was damaged because he has not realized a gain as yet, since
`he still owns the stock. He quotes from Section 37 of the Notice of Proposed Settlement, which
`explains that persons who sold their stock either at a profit or before the market closed on May 18,
`2012 are not persons who were “damaged.” And Mr. Blit correctly states that he neither sold his
`stock on May 18, 2012 nor sold it subsequently at a profit. But Mr. Blit misunderstands the
`implications of the February 23, 2018 date. Anyone who held still held every share of Facebook
`stock purchased in the IPO as of that date is deemed for purposes of the settlement to have realized
`a “paper” gain, measured as the difference between the purchase price and the closing price on
`that date (which in Mr. Blit’s case, as in Ms. Fischle-Epstein’s, is $14,319). On that date – which
`is the end date for purposes of this litigation – his stock was worth far more than he paid for it.
`Therefore, he suffered no damage as damage is measured in this lawsuit. Again, I see no error in
`A.B. Data’s evaluation of his claim.
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`Dyan C. Dow: Mr. Dow’s situation is identical to the situation of the other two Disputed
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`Claimants whose submitted information for consideration by the court. He purchased 100 shares
`of Facebook on May 18, 2012, at a price of $42 per share, and he still held all 100 shares on
`February 23, 2018. As his stock was worth $14,319 more on the last day of the damages period
`than it was on the day he bought it, he suffered no loss that can be compensated from the common
`settlement fund. Mr. Dow has provided the court with proof that he purchased his stock in the IPO,
`but the mere fact that someone purchased Facebook stock during the IPO does not automatically
`entitle that individual to participate in the settlement. By holding his stock, Mr. Dow has made a
`great deal of money; he was, therefore, not “damaged” by the misstatements that were the
`underlying cause of these lawsuits.
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`Case 1:12-cv-07586-RWS Document 209 Filed 06/01/21 Page 3 of 4
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`The 52 other Disputed Claims are denied for the reasons set forth in the Declaration of
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`Adam D. Walter (Docket #613-4) and specifically in Exhibit D thereto (the “Disputed Claims
`Chart”).
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`The Disputed Claims Chart divides the claimants into categories.
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`The first category are persons like the three individuals whose claims are discussed above;
`that is, they purchased Facebook shares during the IPO class period (and in some cases thereafter
`as well) and held them through the cut-off date of February 23, 2018, at which point they were
`deemed to have realized a “paper” gain on their investment, rendering them ineligible to participate
`in the settlement. The common error made by these claimants is their obvious belief that simply
`having purchased Facebook in the IPO and prior to the corrective disclosure entitled them to
`participate in the settlement. But this belief is erroneous. Having held their stock for years, any
`loss they might have suffered initially as long since been wiped out by the massive gains realized
`in Facebook stock. This accounts for 39 of the 55 remaining Disputed Claims, including the three
`discussed individually above.
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`The second category consists of one claimant, Jace Darwin, who bought and sold his
`Facebook stock at a loss on May 18, 2012. For purposes of the settlement, anyone who sold his
`Facebook IPO stock prior to the close of trading on May 18, 2012 is deemed not to have been
`damaged by the misstatements. As Mr. Darwin has not effectively disputed the date of his
`transactions in Facebook, he is ineligible per the terms of the settlement to participate.
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`The third category is a group of 13 shareholders that purchased shares of Facebook stock
`for $42 on May 18, 2012 – some of whom also purchased additional Facebook shares thereafter –
`and sold them prior to February 23, 2018 for a higher price. These claimants suffered no damage;
`they did not lose money on their Facebook investment. They are, therefore, not entitled to
`participate in the settlement.
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`The fourth category consists of four shareholders who purchased their Facebook stock in
`the IPO and who suffered no Net Recognized Loss per the settlement because any loss they
`suffered in connection with the sale of some of their shares for less than the purchase price was
`less than the gain they either (1) actually realized on the sale of their other Facebook shares, or (2)
`were deemed to have realized as of the close of trading on the settlement cut-off date of February
`23, 2018, when the shares held were automatically valued at $183.29. The calculations
`summarized in the Disputed Claims Chart at Item I.D, which differ slightly for each of the four
`shareholders, have been reviewed by the court and are found to be correct and in conformity with
`the terms of the settlement. To the extent the court is able to determine, it appears that some or all
`of these claimants believe that they are entitled to participate in the settlement simply because they
`purchased Facebook stock during the IPO period, without regard to whether they suffered any
`“recognizable loss” (a defined term in the settlement agreement) on their investment. As has
`already been explained, that is not correct.
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`Finally, one shareholder’s claim was disallowed because the shareholder failed to provide
`information about whether and when she disposed of her shares or proof that she still held them.
`The shareholder’s reason for requesting court review – namely, that “Facebook and Nasdaq were
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`Case 1:12-cv-07586-RWS Document 209 Filed 06/01/21 Page 4 of 4
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`the reason for this bad problem” – does not justify participation in the common settlement fund.
`This shareholder (Mary Lou Flannery) did not provide the court with any additional information
`in response to the court-ordered notice. I thus have no reason to dispute A.B. Data’s conclusion
`that the shareholder’s claim must be rejected for failure to cure deficiencies.
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`Having disposed of the Disputed Claims, the court approves the Plan of Distribution and
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`is today signing an order to that effect.
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`Dated: June 1, 2021
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`BY ECF TO ALL COUNSEL
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`_____________________________________
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`U.S.D.J.
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