I disagree with the doctrine of laches being applied to this case. It doesn't make any sense for Ceglia to risk time and money to sue for a company that has just recently become "cash flow positive" let alone break even.
Investors in Facebook should have the concept of "due diligence" applied to them. Trading in pre-IPO stock is not and should not be safeguarded like regular equities or FDIC insured bank deposits.
Ultimately this is Zuckerberg's fault, and any settlements from this case should be paid from his assets.
I think it all rests on whether or not the statute of limitations started ticking before July 2004. According to New York Civil Practice Law & Rules - § 213, which I believe is pertinent to the case, it mentions "two years from the time the plaintiff...could with reasonable diligence have discovered it".
I'd suggest that the doctrine of laches is completely valid in this case. Facebook isn't just a company that has "recently become cash flow positive", it's a company that's been highly valued for at least six years. In June 2004 Peter Thiel invested $500K for 7% (giving it a valuation of $7.1M) and Accel Partners invested $12.7M in May 2005 (valuation ~ $100M). I'm not sure you can say it would be a waste of time to sue for ownership of Facebook as it existed at either of those points as it was clearly valued by astute investors.
The problem with that line of thinking is that those valuations would have only been possible with Zuckerberg and his cadre of Harvard branded friends at the helm of Facebook.
If Ceglia exercised his right to those shares so early in the stage, those people could have easily been poached by Google or started another company.
Just because Peter Thiel and other investors valued it highly doesn't make it so. Would you agree with his investment in largely failed Friendster? No one should be beholden to imaginary valuations by pre-IPO investors who have a higher tolerance for risk.
Investors in Facebook should have the concept of "due diligence" applied to them. Trading in pre-IPO stock is not and should not be safeguarded like regular equities or FDIC insured bank deposits.
Ultimately this is Zuckerberg's fault, and any settlements from this case should be paid from his assets.
I think it all rests on whether or not the statute of limitations started ticking before July 2004. According to New York Civil Practice Law & Rules - § 213, which I believe is pertinent to the case, it mentions "two years from the time the plaintiff...could with reasonable diligence have discovered it".