Winklevoss Twins Ask 9th to Review Facebook Ruling

(CN) - Cameron and Tyler Winklevoss want the full 9th Circuit to reconsider their securities fraud claims against Facebook founder Mark Zuckerberg.

The twins filed a 43-page petition for an en banc hearing before the San Francisco-based federal appeals court on Monday, claiming that a decision last week by a three-judge panel of the court "immunizes" Zuckerberg's alleged crimes.

The Winklevosses aim to rescind their settlement agreement with Zuckerberg in a long-running dispute over the birth of the billion-dollar social networking site. They say Zuckerberg duped them into signing an agreement that grossly undervalued Facebook stock in violation of the Securities Exchange Act.

In an April 11 ruling authored by Chief Judge Alex Kozinski, the three-judge panel found that the Winklevosses had merely been "bested" by Zuckerberg, not defrauded.

"With the help of a team of lawyers and a financial advisor, they made a deal that appears quite favorable in light of recent market activity," Kozinski wrote. "For whatever reason, they now want to back out. Like the District Court, we see no basis for allowing them to do so. At some point, litigation must come to an end. That point has now been reached."

In their petition for rehearing, the twins reiterated their fraud claims and argued that panel's decision counters state and federal precedent enough to threaten "dreadful ramifications."

"The opinion's implication that appellants should take the now more-valuable stock and stop complaining about Facebook's blatant violation of Rule 10b-5 inappropriately minimizes federal securities laws that command honest dealing and full disclosure in the sale or exchange of securities," the petition states. "The panel's opinion immunizes this fraud by enforcing a general release found in the fraudulently induced agreement and by applying a routine mediation confidentiality provision to bar evidence of the fraud. The panel's opinion is so profoundly at odds with federal and state precedent, with dreadful ramifications, that rehearing en banc is required."

The twins are represented by Jerome Falk with Howard Rice Nemerovski Canady Falk & Rabkin.

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