Did Morgan Stanley Share Negative News before Facebook's Initial Public Offering with Institutional Investors?

May 23, 2012

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.

"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. 

Click to Continue

 


blog comments powered by Disqus

Who's right: Donald Trump or Macy's?

 

mexico trump_macys_2015

Macy's has removed Donald Trump's products from their shelves because, while he stated that some of the Mexican people crossing our borders illegally are good people, some are murderers and rapists. While a true statement, it is not a "politically correct" statement, so Macy's has decided to pull his products from their shelves.

As a result of this, will you shop less - or not at all - in Macy's stores in the future?






10 year FSM Anniversary

Snark-asm snap! When will THESE be removed? Larry Elder slams flag-banning libs as only he can [photo]

July 06, 2015  11:29 AM

Oh, snap! 'Monuments of slavery'? This snark-asm offered by Larry Elder puts lib confederate flag banning in hilarious perspective.

Holy cow! It takes just ONE brutal truth boom to expose extent of Hillary Clinton's questions-dodging

July 06, 2015  10:23 AM

Just how bad is Hillary Clinton's questions dodging? THIS bad (it's unreal).

Do you love this photo caption for Hillary-herded journos as much as we do? (Bonus: Biden burn flashback)

July 06, 2015  10:07 AM

Should this photo caption be Hillary Clinton's new campaign slogan? (Yes. If you want to giggle madly)

Hey, Hillary Clinton! This idea for the next time you herd journos in a rope line is GENIUS (Make it happen, GOP)

July 06, 2015  09:24 AM

Resolved: THIS needs to happen the next time Hillary Clinton herds journos with rope line (it's brilliant).

Father of 7-year-old slain in Chicago is 'ranking gang member' with 45 arrests and out on bail on a gun charge

July 05, 2015  11:07 PM

We need felon control.

FSM Archives

More in Economy ( 1 OF 25 ARTICLES )