Morgan Stanley fined $5 mn over Facebook IPO

December 17, 2012
Morgan Stanley agreed Monday to pay a $5 million fine to settle charges that it improperly handled crucial information on Facebook's earnings ahead of the company's disastrous IPO.

Morgan Stanley agreed Monday to pay a $5 million fine to settle charges that it improperly handled crucial information on Facebook's earnings ahead of the company's disastrous IPO.

The securities regulator of the state of Massachusetts had charged that Morgan Stanley, the lead underwriter for the $16 billion stock issue in May, coached on how to present lowered earnings estimates to company analysts.

At the same time, those estimate revisions, made just days before the closed, were not shared with all investors as Morgan Stanley set a high issue price and increased the number of shares on sale.

Facebook shares collapsed after the first day of trade on May 18, eventually falling to half the $38 IPO price, as institutional investors dumped the shares worried about lowered earnings potential.

The share price fall angered many institutional and who said they had been misinformed about the company's .

The Massachusetts state secretary William Galvin said Morgan Stanley had violated securities industry rules against unethical and dishonest conduct.

Morgan Stanley agreed to the civil penalty without either admitting or denying the charges.

Explore further: Zynga holders plan to sell up to $400M in stock

Related Stories

Zynga holders plan to sell up to $400M in stock

March 14, 2012

Zynga shareholders may sell up to $400 million of stock through a public offering, three months after the online game maker went public, to try to avoid a drop in its stock price.

Regulators probe bank's role in Facebook IPO

May 23, 2012

(AP) -- Regulators are examining whether Morgan Stanley, the investment bank that shepherded Facebook through its highly publicized stock offering last week, selectively informed clients of an analyst's negative report about ...

Morgan Stanley may refund some Facebook investors

May 24, 2012

(AP) -- Morgan Stanley, the lead investment bank in Facebook's troubled initial public offering, will compensate retail investors who overpaid when they bought Facebook's stock in Friday's IPO, according to a source familiar ...

Facebook IPO debacle raises investor dander

May 25, 2012

The spate of complaints and investigations over the Facebook stock offering suggests big institutions had an edge over small investors, raising questions about the process.

Recommended for you

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.