By Nate Raymond

NEW YORK, Dec 6 (Reuters) - Bernstein Litowitz Berger & Grossmann and Labaton Sucharow will be the lead law firms in securities lawsuits arising out of Facebook Inc's $16 billion initial public offering, according to a federal judge's ruling on Thursday.

The two firms represent a group of state pension funds in North Carolina and Arkansas and other investors that were chosen as lead plaintiffs in proposed class action litigation over the IPO. The investors have accused Facebook of misrepresenting its financial condition in the run-up to the May stock offering.

The ruling helps set a structure for the Facebook IPO litigation, a headache for the social media company and a nagging reminder of the technical glitches in what had been one of the most hotly anticipated stock market debuts in recent memory.

U.S. District Judge Robert Sweet in Manhattan also named lead plaintiffs and counsel for lawsuits against NASDAQ OMX Group Inc stemming from the IPO. NASDAQ was sued for securities law violations and negligence over allegations that orders to buy and sell Facebook weren't properly executed on the first day of trading.

The plaintiffs also say the company concealed information about a slide in its revenue tied to changes in how people accessed its popular social networking Web site.

Facebook, which has defended its pre-IPO disclosures, declined to comment Thursday through a spokeswoman. A spokesman for NASDAQ declined to comment on the litigation.

Since debuting at $38 per share, Facebook shares later fell by as much as 50 percent. They closed at $26.90 on Thursday, down 2.6 percent.

Sweet, in his written order, consolidated the cases and picked lead plaintiffs to head up most of the 42 lawsuits before him arising out of the IPO. The order was intended to streamline evidence gathering and briefing, as well as provide leadership for the lawsuits.

PLAINTIFF GROUP

Under the Private Securities Litigation Reform Act, courts routinely select a lead plaintiff, who is typically the shareholder with the biggest losses, though judges have discretion to pick a different investor.

The plaintiff group picked to lead 31 cases alleging securities violations against Facebook includes the North Carolina Retirement Systems, Arkansas Teacher Retirement System, the Fresno County Employees' Retirement Association and Banyan Capital Master Fund Ltd. The group has collectively claimed a combined $7.1 million in losses.

"Its members are large, institutional investors with experience representing shareholder classes in similar litigation with the resources to pursue the action," Sweet said.

The pension fund group edged out a challenge by another group including Eiffel Tower Ventures LLC that is represented by Robbins Geller Rudman & Dowd.

The Eiffel Tower group had a smaller combined loss of $1.5 million. But its lawyers challenged picking the pension fund group because of alleged conflicts of interest, among other factors.

The group had argued that North Carolina Treasurer Janet Cowell had close personal ties with Erskine Bowles, a board member at Facebook and Morgan Stanley, the lead underwriter on the IPO and also a defendant in some of the lawsuits. Bowles is also a president emeritus at the University of North Carolina and a former White House chief of staff.

Sweet, though, said even if Bowles and Cowell have "significant personal and financial ties," there was no indication that would have an impact on the institutional investor group's ability to lead the class.

Max Berger, the lead attorney at Bernstein Litowitz on the case, said North Carolina's fund would be a "tremendous lead plaintiff" in what has become a "very important case." He said that the Eiffel Tower group's conflict allegations were not substantive.

Samuel Rudman, a lawyer at Robbins Geller on the case, declined comment.

The judge also picked investors and lawyers to lead the 10 proposed class actions against NASDAQ.

The judge said First New York Securities LLC, T3 Trading Group, LLC, and Avatar Securities, LLC, would act as co-lead plaintiffs in the lawsuits alleging securities law violations. The group traded a combined $316 million in Facebook shares the day of the IPO, the decision said.

The law firm Entwistle & Cappucci was named lead counsel for lawsuits accusing NASDAQ of federal securities law violations. Two other law firms, Finkelstein Thompson and Lovell Stewart Halebian Jacobson, were named to lead cases accusing NASDAQ of negligence.

The case is In re Facebook, Inc, IPO Securities and Derivative Litigation, U.S. District Court, Southern District of New York, MDL No. 12-2389.

For the Institutional Investor Group: Max Berger, Bernstein Litowitz Berger & Grossman, and Thomas Dubbs, Labaton Sucharow.

For Eiffel Tower Ventures, LLC, et al.: Samuel Rudman, Robbins Geller Rudman & Dowd.

For the NASDAQ Claimant Group: Andrew Entwistle, Entwistle & Cappuci.

For the NASDAQ Negligence Parties: Michael McLellan, Finkelstein Thompson, and Christopher Lovell, Lovell Stewart Halibian Jacobson.

For Facebook, Inc: Andrew Clubok, Kirkland & Ellis; and Richard Bernstein, Willkie Farr & Gallagher.

For underwriter banks: James Rouhandeh of Davis Polk & Wardwell.

For NASDAQ: William Slaughter of Ballard Spahr.

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