The News Courier in Athens, Alabama

State and Nation

December 17, 2012

Mass. fines Morgan Stanley $5M over Facebook IPO

— BOSTON (AP) — Morgan Stanley, the lead underwriter for Facebook's troubled public stock offering, has agreed to pay $5 million to Massachusetts' securities regulators after they accused it of disclosing a revenue shortfall only to certain analysts and not the general public.

According to state regulators, a Morgan Stanley banker organized phone calls between Facebook's treasurer and the analysts of major underwriters to relay revenue figures that weren't included in revised documents Facebook Inc. filed with U.S. securities authorities on May 9, about a week before the initial public offering of stock.

The numbers were lower than what many analysts had expected and caused them to revise their annual revenue estimates down about 3 percent below the $5 billion that Facebook had earlier forecast for 2012, according to Massachusetts officials.

The renewed estimates were available to investment banks but not individual investors who bought into one of the most highly anticipated initial public offerings of stock in history.

"Main Street investors were put at a significant disadvantage to Wall Street," Massachusetts' Secretary of the Commonwealth, William Galvin, said in a press release Monday.

Facebook shares were priced at $38, the top of a projected range, but finished the first day of exuberant trading barely above its initial public offering price, at $38.23. Since then, shares have failed to return to that lofty valuation. On Monday, they closed down 3 cents at $26.78, about 30 percent below the IPO price.

Morgan Stanley didn't admit guilt but agreed to be censured and pay the fine. Spokesman Wesley McDade said in a statement that the company was pleased "to have put this matter behind us."

"Morgan Stanley is committed to robust compliance with both the letter and the spirit of all applicable regulations and laws," he said.

In October, Massachusetts' Galvin also slapped Citigroup with a $2 million fine after one of its analysts leaked information to a popular technology blog that was supposed to be private until 40 days after Facebook's IPO. The employee was fired.

1
Text Only
State and Nation
Photos


Poll

Which foreign crisis is the biggest threat to the security of the United States?

Russia-Ukraine
Israel-Palestine
Iraq
None of the above
     View Results
Facebook
AP Video
Netanyahu Vows to Destroy Hamas Tunnels Obama Slams Republicans Over Lawsuit House Leaders Trade Blame for Inaction Malaysian PM: Stop Fighting in Ukraine Cantor Warns of Instability, Terror in Farewell Ravens' Ray Rice: 'I Made a Huge Mistake' Florida Panther Rebound Upsets Ranchers Small Plane Crash in San Diego Parking Lot Busy Franco's Not Afraid of Overexposure Fighting Blocks Access to Ukraine Crash Site Dangerous Bacteria Kills One in Florida Workers Dig for Survivors After India Landslide Texas Scientists Study Ebola Virus Smartphone Powered Paper Plane Debuts at Airshow Southern Accent Reduction Class Cancelled in TN
Twitter Updates
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide
Stocks
Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.
Business Marquee