FINRA, SEC to Investigate First-Day Facebook Stock Problems
May 23, 2012 3:46 PM
Facebook, NASDAQ, banks and underwriters associated with the IPO are all being sued
U.S. financial regulators are investigating claims by investors who say that they didn't receive all the correct information before buying Facebook's stock.
All seemed to be going well for Facebook, which had launched the largest initial public offering (IPO) of all time last week. The social network went public at $38 per share on Friday, and the company was
valued at over $100 billion
However, this IPO domination soon took a tumble only days after launch. On Monday, Facebook shares plunged 11 percent, and fell a total of 19 percent in a two-day span. According to
, the company lost over $19 billion in market capitalization from the $38 per share offering price when it closed at $31 per share.
Now, Morgan Stanley, Goldman Sachs Group Inc. and JPMorgan Chase & Co. are being sued by investors in Manhattan federal court who claim that they were lied to about Facebook revenue forecasts before purchasing stock. Other underwriters, like Bank of America Corp. and Barclays PLC, as well as Facebook executives, are being sued as well.
According to reports, underwriters had like Morgan Stanley had selectively shared Facebook estimates, leaving out certain details that would have possibly changed investors' minds. Morgan Stanley reportedly cut its revenue forecasts for Facebook only days before the IPO launched, yet failed to let investors in on the changes.
Banks named in the suit had also cut their estimates for Facebook for the full year 2012 and did not inform investors
before the IPO
"The underwriters took down their earnings estimates dramatically during the road show and only told a select group of investors," said Samuel Rudman, a lawyer for the plaintiffs.
This has led to an investigation from the U.S. Securities and Exchange Commission (SEC) as well as the Financial Industry Regulatory Authority (FINRA). The two will review the first day trading of Facebook shares.
"That's a matter of regulatory concern to us and I'm sure to the SEC," said Richard Ketchum, the Financial Industry Regulatory Authority's chairman and chief executive. "And without saying whether it's us or the SEC, we will collectively be focusing on it."
NASDAQ is also under the microscope in the Facebook stock fiasco. A Facebook investor sued NASDAQ yesterday in the same Manhattan federal court for mishandling trades in Facebook stock. This ultimately led to delays in customer orders. The investor is seeking class-action status for the suit and is representing all
investors who lost money
because their orders were not processed appropriately.
"I'd be pissed too, but you didn't have to go all Minority Report on his ass!" -- Jon Stewart on police raiding Gizmodo editor Jason Chen's home
Facebook IPO Exceeds $100 Billion Mark
May 15, 2012, 10:37 AM
Facebook to Go Public May 18
May 2, 2012, 1:47 PM
Facebook to Raise $10 Billion for 2012 IPO; Company Value Could Double HP's
November 29, 2011, 12:07 PM
Google has developed Deep Learning Algorithm to detect Diabetic Eye Disease
December 4, 2016, 5:00 AM
Google plans ultra-fast wireless Internet for Research Triangle Park, N.C.
August 12, 2016, 6:30 AM
Twitter Senior VP: "Diversity is Important, But We Can’t Lower the Bar"
November 9, 2015, 9:59 AM
CNN Resorts to Internet Censorship to Promote Clinton Over Senator Sanders
October 15, 2015, 2:47 PM
Breaking Bad: How to Crash Google's Chrome Browser With Just 8 Characters
September 23, 2015, 11:08 AM
Quick Note: Amazon UK Offers £10 Back on Any Order £50 or Over
August 3, 2015, 12:05 PM
Most Popular Articles
What Can You Do with Your New Echo Dot?
December 3, 2016, 5:00 AM
Sales Battle - Apple iPad Mini vs Samsung Galaxy Tab
November 29, 2016, 12:36 AM
Google Wi-Fi – A Scalable Wi-Fi Solution for any size Home or Apartment
November 30, 2016, 1:00 AM
PIQ ROBOTTM reveals its new artificial intelligence software
November 29, 2016, 12:59 AM
PlayStation 4 Pro – 4K Console for 4K TVs
November 28, 2016, 1:00 AM
Latest Blog Posts
e Guide: Mobile Security for 2017
Dec 6, 2016, 5:00 AM
Apple Car is Not Dead
Dec 5, 2016, 1:00 AM
Dec 4, 2016, 5:00 AM
Dec 3, 2016, 5:00 AM
Dec 2, 2016, 5:00 AM
Surface Ergonomic Keyboard
Dec 1, 2016, 3:01 AM
Chapeconense plane crash: Football rallies around Brazilian Team
Nov 30, 2016, 1:00 AM
How to Extends Your iPhone’s Battery Life
Nov 29, 2016, 12:49 AM
Nov 28, 2016, 1:12 AM
News: Fidel Castro
Nov 27, 2016, 5:00 AM
Nov 26, 2016, 5:00 AM
Changes in Social status affect the way genes turn on and off within immune cells.
Nov 25, 2016, 5:12 AM
Austrian far–right hopeful Hofer may back EU vote.
Nov 24, 2016, 4:00 AM
Final Fantasy XV Leaked Before Nov 29 Launch Date
Nov 23, 2016, 1:00 AM
Nov 22, 2016, 2:26 AM
Nov 21, 2016, 1:00 AM
HTC Makes Big Moves in China
Nov 20, 2016, 2:00 AM
Do you know who is the number one company in the word?
Nov 19, 2016, 5:30 AM
Foldable Cardboard ”EcoHelmet” wins James Dyson Award’s Top Prize
Nov 18, 2016, 2:39 AM
Scientists Discover Roundest Object Ever Spotted in Universe
Nov 17, 2016, 1:00 AM
More Blog Posts
Copyright 2016 DailyTech LLC. -
Terms, Conditions & Privacy Information