Facebook founder Mark Zuckerberg knew company shares were overpriced before the May initial public offering and quietly dumped around $1 billion in shares, the TMZ website reports.

Facebook shares were priced at $38 a share ahead of the offering before tanking to around $27 Monday on concerns that despite having 900 million users, monetizing that base will be difficult.

Complaints persist that underwriters priced the share too high and also gave a few institutional investors access to analyst calls on the company warning that revenues were cause for concern and left everyone else in the dark.

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Facebook employees are reportedly suing Zuckerberg for using that data to dump his own stock.

"A new lawsuit claims Mark Zuckerberg pulled a billion dollar fast one on Facebook investors," TMZ reports.

"The class action lawsuit — filed by disgruntled Facebook shareholders — claims the 28-year-old CEO had inside info that the stock was grossly overvalued, and he protected his own financial hide by quickly unloading a ton of Facebook stock."

"This is the second time in two weeks a group of FB shareholders have joined together to accuse the mogul of withholding information."

TMZ did not cite any sources or specific financial details.

"The lawsuit claims Zuckerberg and his cronies hid the fact that there was a foundational flaw in the Facebook business model — that there was not nearly enough advertising revenue to support a stock valued at $38 a share," TMZ adds.

"The lawsuit claims Morgan Stanley, JPMorgan, and Goldman Sachs — all sounded the alarm before the IPO that Facebook was seriously overvalued, but that information was 'selectively disclosed' to the largest investors."

Facebook's advertising issues continue to grab headlines.

A poll, meanwhile, shows that Facebook users aren't likely to buy something they see advertised or hyped up on the iconic social network.

Four out of five Facebook users have never bought a product or service either through advertising or through comments appearing on the social network site, a Reuters/Ipsos poll finds.

Meanwhile, 34 percent of Facebook users are spending less time on the website than six months ago, the poll also finds, adding only 20 percent are spending more time on the site.

A February study by research firm eMarketer shows email or direct-mail marketing campaigns may be more useful than Facebook when it comes to advertising.

"It shows that Facebook has work to do in terms of making its advertising more effective and more relevant to people," says eMarketer analyst Debra Williamson, according to Reuters.

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