News / Economy

US Regulators Looking at Leadup to Facebook IPO

Facebook IPO Results in Lawsuit; Investigationi
|| 0:00:00
X
Carolyn Presutti
May 24, 2012 12:37 AM
The recent, initial public offering of Facebook stock thrilled many traders on Wall Street and investors around the world. But now, a regulatory investigation and a major lawsuit hang over that publicized public offering. VOA's Carolyn Presutti has the details.

Facebook IPO Results in Lawsuit; Investigation

WASHINGTON - The recent, initial public offering of Facebook stock thrilled many traders on Wall Street and investors around the world.  But after an intra-day spurt from $38 a share to over $40 a share on the opening day, the stock has dropped to just over $30.   
 
Now, a regulatory investigation and a major lawsuit hang over that publicized public offering.  
 
Facebook's much celebrated, initial public offering made global news.  But some investors didn't see the mammoth social network as a money maker.
 
U.S. lawmakers are also looking into issues with Facebook's initial public offering. 
 
The Senate Banking Committee says its staff will meet with Facebook officials, regulators and other stakeholders.  A spokeswoman for the House Financial Services Committee says staff members are being briefed on the issue and the topic will likely be raised in hearings. 
 
The Securities and Exchange Commission and the Financial Industry Regulatory Authority, Wall Street's investigative arm, have also called for a review of Facebook's IPO. 
"Everyone I know does not buy anything off of Facebook," said investor Jennifer Parker. "Those little click ads on the side.  Basically, I just click them off, and I'm like, 'uninterested, uninterested.'"
 
Turns out, Facebook knew that.  More and more mobile device users were ignoring ads.  So, Facebook advised underwriters to lower forecasts.  Lead underwriter Morgan Stanley did, but allegedly only shared those revised estimates with some investors.  
 
Jason Tanz, with the magazine Wired, said, "If people with more power and money to invest got a different set of facts and information and analysis than the average investor, then yes, that's troubling."
 
Jeff Sica, founder and chief investment officer of Sica Wealth Management, says the heat is really on the underwriters, who deny doing anything wrong. 
 
"The lawsuits are very indicative of investors' outright negative opinion of some of the underwriters like Morgan Stanley and Goldman Sachs.  Looking at it from the standpoint of how the retail investor feels about whether or not they can trust these institutions again is going to have very long lasting effects," he said. 
 
Troubling too, is a lawsuit against NASDAQ, the American stock exchange that handled Facebook's IPO.  Lead plantiff Philip Goldberg claims investors like him lost money because NASDAQ delayed or mishandled their stock orders.
 
Goldberg runs his own business from inside his Maryland condominium.  His attorney won't permit him to talk on camera, but Goldberg says he's a typical investor.
 
"The whole Facebook IPO has been a mess," said Patrick Carroll, the founder of Wealth Strategies Group, a financial consulting firm. He never recommended Facebook to his clients in the first place.
 
"I wouldn't be buying Facebook at any price at this point.  I'd wait to see what happened going forward, coming out with the regulatory issues," he said. 
 
Facebook is not commenting.  And, Morgan Stanley says it followed the same procedures with Facebook as it does with all IPOs.

Bernard Shusman contribted to this report. 

Carolyn Presutti

Carolyn Presutti is an Emmy and Silver World Medal award winning television correspondent who works out of VOA’s Washington headquarters.   She has also won numerous Associated Press awards and a Clarion for her coverage of The Syrian Medical Crisis, Haiti, The Boston Marathon Bombing, Presidential Politics, The Southern Economy, and The 9/11 Bombing Anniversary.  In 2013, Carolyn aired exclusive stories on the Asiana plane crash and was named VOA’s chief reporter with Google Glass.

You can follow Carolyn on Twitter at CarolynVOA, on Google Plus and Facebook.

You May Like

Video Experts Warn World Losing Ebola Fight

Doctors Without Borders says world is losing battle against Ebola, unless wealthy nations dispatch specialized biological disaster response teams More

Video Experts: Rise of Islamic State Significant Development in Jihadism

Many analysts contend the group - which grew out of al-Qaida in Iraq - has been rebuilding for years More

US-Based Hong Kongers Pledge Support for Pro-Democracy Activists

Democracy advocates call on Chinese living abroad to join them in opposing new election rules for their home territory More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Larger Than Life Chinese Lanterns Make Southern California Appearancei
X
Elizabeth Lee
September 02, 2014 8:57 PM
Chinese lanterns with a long history are lighting up in 21st century style at the Los Angeles County Fair in southern California. Visitors can see traditional lanterns that hang, but also lanterns in the shape of animals, iconic landmarks and many other objects, all created by artisans from a place in China known for its lanterns. Elizabeth Lee has the details from the fair in the city of Pomona.
Video

Video Larger Than Life Chinese Lanterns Make Southern California Appearance

Chinese lanterns with a long history are lighting up in 21st century style at the Los Angeles County Fair in southern California. Visitors can see traditional lanterns that hang, but also lanterns in the shape of animals, iconic landmarks and many other objects, all created by artisans from a place in China known for its lanterns. Elizabeth Lee has the details from the fair in the city of Pomona.
Video

Video Experts See Rise of ISIS as Significant Development

The Islamic State’s rise seems sudden. It caught the U.S. by surprise this summer when it captured large portions of northern Iraq and spread its wings in neighboring Syria. But many analysts contend that the group - which grew out of al-Qaida in Iraq - has been rebuilding for years. VOA's Jela de Franceschi takes a closer look at the rise of ISIS and its implications for the Middle East and beyond.
Video

Video Israel Concerned Over Syrian Rebels in Golan

Israeli officials are following with concern the recent fighting between Syrian rebels and government forces near the contested Golan Heights. Forty-four U.N. peacekeepers from Fiji have been seized by Syrian Islamist rebels and the clashes occasionally have spilled into Israel. VOA’s Scott Bobb reports from Jerusalem.
Video

Video Ukraine Schools Resume Classes, Donate to Government Forces

A new school year has started in Ukraine but thousands of children in the war-torn east are unable to attend because of ongoing clashes with pro-Russia rebels. In Ukraine's capital, patriotic education has become the norm along with donations to support injured security forces fighting to take back rebel-held areas. VOA's Daniel Schearf reports from Kyiv.
Video

Video US Detainees Want Negotiators for Freedom in North Korea

The three U.S. detainees held in North Korea were permitted to speak with foreign media Monday. The government of Kim Jong Un restricted the topics of the questions, and the interviews in Pyongyang were limited to five minutes. Each of the men asked Washington to send a representative to Pyongyang to secure his release. VOA’s Carolyn Presutti has our story.
Video

Video Turkmen From Amerli Describe Survival of IS Siege

Over the past few weeks, hundreds of Shi'ite Turkmen have fled the town of Amerli seeking refuge in the northern city of Kirkuk. Despite recent military gains after U.S. airstrikes that were coordinated with Iraqi and Kurdish forces, the situation remains dire for Amerli’s residents. Sebastian Meyer went to Kirkuk for VOA to speak to those who managed to escape.
Video

Video West Africa Ebola Vaccine Trials Possible by Early 2015

A U.S. health agency is speeding up clinical trials of a possible vaccine against the deadly Ebola virus that so far has killed more than 1,500 people in West Africa. If successful, the next step would be a larger trial in countries where the outbreak is occurring. VOA's Carol Pearson has more.
Video

Video Survivors Commemorate 70th Anniversary of Nazi Liquidation of Jewish Ghetto

When the German Nazi army occupied the Polish city of Lodz in 1939, it marked the beginning of a long nightmare for the Jewish community that once made up one third of the population. Roughly 200,000 people were forced into the Lodz Ghetto. Less than 7,000 survived. As VOA’s Kane Farabaugh reports, some survivors gathered at the Union League Club in Chicago on the 70th anniversary of the liquidation of the Lodz Ghetto to remember those who suffered at the hands of the Nazi regime.

AppleAndroid

World Currencies

EUR
USD
0.7537
JPY
USD
103.79
GBP
USD
0.6032
CAD
USD
1.0957
INR
USD
60.522

Rates may not be current.