Facebook Shows There's a Sucker Born Every Minute

By DAVID WEIDNER, WSJ

Dear Facebook Investor:

If you're one of the shareholders suing Facebook Inc. because the social-networking company and its underwriters played favorites about disclosing changes to analysts' forecasts, then you deserve to be compensated for your losses or have your trades wiped out if the allegations turn out to be true.

Still, that doesn't mean you aren't an old-fashioned Wall Street sucker.

The reason: You didn't have to follow Facebook's initial public offering with the zeal of Robert Caro to recognize there were significant problems.

Consider that as Facebook readied its IPO, there was a lot of shifty business: On May 15, the price was boosted to $38 from a range that bottomed at $28. The next day, the offering size swelled by 50 million shares. Then came a disclosure that insiders would sell 53% more shares, or 84 million shares, in the IPO than previously planned.

(More here.)