| 2012.05.25 |
One week after its IPO, Facebook's stock price continues to
dive while problems continue to rise.
At the time of publication, FB was trading nearly 18% below it's $38 initial price, which was set by a consortium of 33
underwriters led by Morgan Stanley.
Meanwhile, allegations of preferential treatment to institutional investors are being investigated by
the Financial Industry Regulatory Authority, the State of Massachusetts, and the U.S. Congress. The suits
contend that negative information about the IPO was privately circulated among preferred institutional
investors and withheld from others — a violation of securities law. Banks that revised their revenue
projections for Facebook shortly before the IPO include Morgan Stanley, JPMorgan, Bank of America, and
Goldman Sachs.
Four firms that execute stock trades have told the SEC they've lost a combined $140M due to connectivity
problems with NASDAQ shortly after the Facebook IPO last Friday. At least Knight Capital is seeking compensation
from NASDAQ for their share of the loss. In related news, Reuters reported Fidelity Investments was working with
thousands of brokerage clients affected by the trading issues. Trading of the shares was so furious it set
a volume record.
Links:
"Facebook's Stock Slips Again!" (CNNMoney)
"Facebook IPO: Wall Street's Losses Mount" (CNNMoney)
"Facebook's IPO: Sorting Through the Legal Mess" (CNNMoney)
"The Numbers on the Facebook Earnings Revisions" (Reuters)
"Exclusive: Fidelity Facing 'Thousands' Hit by Facebook Woes" (Reuters)
"UPDATE 1- Citi Unit Lost $20 MLN in Facebook IPO -Source" (Reuters)
"Knight Capital Hit by Facebook Loss, Wants NASDAQ to Pay"
(Reuters)
"UBS, Citigroup Lost $50M Due To Nasdaq’s Facebook Glitches"
(Wall Street Journal)
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