CNBC: Regulators to Review Morgan Stanley Facebook Allegations.

[KeystoneRegional]

 

Reuters via CNBC [New York, NY] - "The Financial Industry Regulatory Authority's chairman said on Tuesday that regulators plan to review allegations that

Morgan Stanley

 

 

shared negative news before

Facebook's

 

 

 

initial public offering with institutional investors.

 

 

 

Photo by Jodi Gralnick for CNBC.com

 

 

 

"The allegations, if true, are a matter of regulatory concern" to FINRA and SEC, Ketchum told Reuters.

 

 

Ketchum made the remarks to Reuters in response to allegations that Morgan Stanley

[MS 13.31 0.12 (+0.91%) ], the lead underwriter on the deal, unexpectedly delivered some negative news to major clients in the run-up to Facebook's [FB 31.00 -3.03 (-8.9%) ] $16 billion IPO: The bank's consumer Internet analyst, Scott Devitt, was reducing his revenue forecasts for the company.

 

 

 

 

Massachusetts Secretary of Commonwealth William Galvin has issued a subpoena to Morgan Stanley over the discussions with investors on Facebook.

 

 

 

 

It is unusual for analysts at lead underwriters to make such changes so close to the IPO, sources said. It is unclear whether Morgan Stanley only told its top clients about the revised view or spread the word more broadly.

 

 

 

 

"The Securities Division has put out a subpoena to Morgan Stanley in connection with the analyst's discussion with certain institutional investors about the revenue prospects for Facebook,'' a spokesman for Galvin's office said.

 

 

 

 

Morgan Stanley maintains that its handling of the Facebook IPO was in compliance with standard procedure.

 

 

 

 

"Morgan Stanley followed the same procedures for the Facebook offering that it follows for all IPOs. These procedures are in compliance with all applicable regulations," the brokerage said in a statement to CNBC.

 

 

 

"After Facebook released a revised S-1 filing on May 9 providing additional guidance with respect to business trends, a copy of the amendment was forwarded to all of MS’s institutional and retail investors and the amendment was widely publicized in the press at the time. In response to the information about business trends, a significant number of research analysts in the syndicate who were participating in investor education reduced their earnings views to reflect their estimate of the impact of the new information. These revised views were taken into account in the pricing of the IPO," the statement said.

 

 

 

In a separate case,

Nasdaq OMX Group has been sued by an investor who claimed the exchange operator was negligent in handling orders for Facebook shares following its IPO, causing losses for investors.

 

 

 

 

Phillip Goldberg, a Maryland resident, is seeking class-action status on behalf of all investors who lost money because Nasdaq delayed or otherwise mishandled their buy, sell or cancellation orders for Facebook stock on May 18, the day the social networking giant went public.

 

 

 

 

A senior Nasdaq official told CNBC the exchange would have addressed the issue had it known the extent of the technical problems.

 

 

 

 

"My intention was to make clear that we believed we had a good solution in place and that if we had known that our solution was inadequate, we would have fixed the issue with the right solution before going forward," said Eric Noll, the head of transaction services at Nasdaq OMX Group."

 

 

 

 

 

Source Link:

http://www.cnbc.com/id/47523622/

 

 

[Grand Concourse]

Price was overstated from the start. I'm just glad I didn't invest in it.

[Den]

That facebook stock is going to take a plunge into the teens or low $20s because it doesn't generate much revenue. Its a social networking site. People go there to screw around, people dont go there to buy stuff, so no one really clicks on those ads on the screen. A majority of the advertisers even pull their ads once its time for renewal because they see little to no traffic at all coming from them. If people want to shop they go ANYWHERE but facebook to do it. Its not the golden egg they led people to believe it would be. Give it another year or two and they will see user counts drop big time.

[Grand Concourse]

I just hope they don't decide to charge users to stay on to make up for the losses. lol, is myspace still around? (*I know, just making a rhetorical question.)

[KeystoneRegional]

It's going to float around the upper $20's and lower $30's for a while until something big happens which is pretty hard since all the "big" things already happened...