News / Economy

    US Regulators Looking at Leadup to Facebook IPO

    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 TV, Radio, and Multimedia awards, as well as a Clarion for her TV coverage of The Syrian Medical Crisis, Haiti, The Boston Marathon Bombing, Presidential Politics, The Southern Economy, Google Glass & Other Wearables, and the 9/11 Anniversary.

    You May Like

    Video For Many US Veterans, the Vietnam War Continues

    More than 40 years after it ended, war in Vietnam and America’s role in it continue to provoke bitter debate, especially among those who fought in it

    Video Newest US Citizens, Writing the Next Great Chapter

    100 immigrants graduated Friday as US citizens in New York, joining the ranks of 680,000 others every year in cities across country

    Family's Fight Pays Off With Arlington Cemetery Burial Rights for WASPs

    Policy that allowed the Women Airforce Service Pilots veterans to receive burial rites at Arlington had been revoked in 2015

    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.
    Vietnamese-American Youth Optimistic About Obama's Visit to Vietnami
    X
    Elizabeth Lee
    May 22, 2016 6:04 AM
    U.S. President Barack Obama's visit to Vietnam later this month comes at a time when Vietnam is seeking stronger ties with the United States. Many Vietnamese Americans, especially the younger generation, are optimistic Obama’s trip will help further reconciliation between the two former foes. Elizabeth Lee has more from the community called "Little Saigon" located south of Los Angeles.
    Video

    Video Vietnamese-American Youth Optimistic About Obama's Visit to Vietnam

    U.S. President Barack Obama's visit to Vietnam later this month comes at a time when Vietnam is seeking stronger ties with the United States. Many Vietnamese Americans, especially the younger generation, are optimistic Obama’s trip will help further reconciliation between the two former foes. Elizabeth Lee has more from the community called "Little Saigon" located south of Los Angeles.
    Video

    Video First-generation, Afghan-American Student Sets Sights on Basketball Glory

    Their parents are immigrants to the United States. They are kids who live between two worlds -- their parents' homeland and the U.S. For many of them, they feel most "American" at school. It can be tricky balancing both worlds. In this report, produced by Beth Mendelson, Arash Arabasadi tells us about one Afghan-American student who seems to be coping -- one shot at a time.
    Video

    Video Newest US Citizens, Writing the Next Great Chapter

    While universities across the United States honor their newest graduates this Friday, many immigrants in downtown Manhattan are celebrating, too. One hundred of them, representing 31 countries across four continents, graduated as U.S. citizens, joining the ranks of 680,000 others every year in New York and cities around the country.
    Video

    Video Vietnam Sees Strong Economic Growth Despite Incomplete Reforms

    Vietnam has transformed its communist economy to become one of the world's fastest-growing nations. While the reforms are incomplete, multinational corporations see a profitable future in Vietnam and have made major investments -- as VOA's Jim Randle reports.
    Video

    Video Qatar Denies World Cup Corruption

    The head of Qatar’s organizing committee for the 2022 World Cup insists his country's bid to host the soccer tournament was completely clean, despite the corruption scandals that have rocked the sport’s governing body, FIFA. Hassan Al-Thawadi also said new laws would offer protection to migrants working on World Cup construction projects. VOA's Henry Ridgwell reports.
    Video

    Video Infrastructure Funding Puts Cambodia on Front Line of International Politics

    When leaders of the world’s seven most developed economies meet in Japan next week, demands for infrastructure investment world wide will be high on the agenda. Japanese Prime Minister Shinzo Abe’s push for “quality infrastructure investment” throughout Asia has been widely viewed as a counter to the rise of Chinese investment flooding into region.
    Video

    Video Democrats Fear Party Unity a Casualty in Clinton-Sanders Battle

    Democratic presidential front-runner Hillary Clinton claimed a narrow victory in Tuesday's Kentucky primary even as rival Bernie Sanders won in Oregon. Tensions between the two campaigns are rising, prompting fears that the party will have a difficult time unifying to face the presumptive Republican nominee, Donald Trump. VOA national correspondent Jim Malone has more from Washington.
    Video

    Video Portrait of a Transgender Marriage: Husband and Wife Navigate New Roles

    As controversy continues in North Carolina over the use of public bathrooms by transgender individuals, personal struggles with gender identity that were once secret are now coming to light. VOA’s Tina Trinh explored the ramifications for one couple as part of trans.formation, a series of stories on transgender issues.
    Video

    Video Amerikan Hero Flips Stereotype of Middle Eastern Character

    An Iranian American comedian is hoping to connect with American audiences through a film that inverts some of Hollywood's stereotypes about Middle Eastern characters. Sama Dizayee reports.
    Video

    Video Budding Young Inventors Tackle City's Problems with 3-D Printing

    Every city has problems, and local officials and politicians are often frustrated by their inability to solve them. But surprising solutions can come from unexpected places. Students in Baltimore. Maryland, took up the challenge to solve problems they identified in their city, and came up with projects and products to make a difference. VOA's June Soh has more on a digital fabrication competition primarily focused on 3-D design and printing. Carol Pearson narrates.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.8916
    JPY
    USD
    109.40
    GBP
    USD
    0.6905
    CAD
    USD
    1.3147
    INR
    USD
    67.522

    Rates may not be current.