FINRA, SEC to Investigate First-Day Facebook Stock Problems
May 23, 2012 3:46 PM
comment(s) - last by
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.
This article is over a month old, voting and posting comments is disabled
RE: People Are Stupid
5/24/2012 11:49:33 AM
Exactly! It is Geocities but with a dumbed down, plug and play UI attached to it instead of forcing you to write your own HTML--well, and linking between sites.
I predict that FB will start charging users a small monthly usage fee at some point. Now that they are public, SuckerBerg will learn all about the pressure that gets put on CEOs from shareholders. They want to see dollar signs.
Once they start charging users... we'll see a mass exodus to the next big thing. Out of those 900 million users, I bet a TON of them won't want to pay a fee. Free is king on sites like this. The thing is, free doesn't sit well with the stock market.
"Intel is investing heavily (think gazillions of dollars and bazillions of engineering man hours) in resources to create an Intel host controllers spec in order to speed time to market of the USB 3.0 technology." -- Intel blogger Nick Knupffer
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
AT&T Launches U-verse with GigaPower Network in Austin, Texas
December 11, 2013, 5:14 PM
Harlem to Receive U.S.' Largest Free Wi-Fi Network
December 11, 2013, 11:48 AM
Google's First Asian Data Centers Now Operational
December 11, 2013, 8:50 AM
Seattle's High-Speed Internet Rollout Delayed Due to Financial Issues
December 10, 2013, 12:14 PM
Report: Spotify Working on Free, Ad-Supported Mobile Service
December 6, 2013, 9:52 AM
Microsoft Protecting International Customer Data Through Increased Encryption, Litigation
December 5, 2013, 6:15 PM
Most Popular Articles
Experts: Masturbation Prevents Cancer, Diabetes, Insomnia, and Depression
December 6, 2013, 2:01 PM
Hackers Nab 2 Million Login Credentials from Facebook, Gmail, Twitter
December 5, 2013, 1:00 PM
Thieves Steal Truck with Cobalt-60 Onboard in Mexico, Will Die "Without a Doubt" from Exposure
December 5, 2013, 12:04 PM
Man Arrested for Using 5 Cents Worth of Electricity to Charge Nissan Leaf at Middle School
December 4, 2013, 8:00 PM
U.S. Navy Fires "XFC" Drone from Underwater Submarine
December 6, 2013, 2:35 PM
Latest Blog Posts
Justice Leaks Details of Next HTC One Two Flagship Phone
Dec 5, 2013, 4:04 PM
Global Cyber Espionage Concerns Reveal Growing Cyber Armies
Nov 29, 2013, 11:04 AM
Is The Period Becoming an Expression of Anger?
Nov 26, 2013, 2:02 PM
NSA and Congress -- You Will Never Kill the Constitution, It's an Idea
Nov 10, 2013, 2:00 PM
AT&T Explores $100B+ USD Deal to Acquire Vodafone's European Operations
Nov 4, 2013, 7:34 AM
More Blog Posts
Copyright 2013 DailyTech LLC. -
Terms, Conditions & Privacy Information