Morgan Stanley, the lead firm on Facebook’s initial public offering, has been fined $5m by Massachusetts over claims the firm gave research analysts information that wasn’t provided to all investors in the sale.
'While retail investors were left to interpret vague qualitative information' from a regulatory filing, analysts were given “specific numbers” to lower their revenue estimates, Secretary of the Commonwealth William Galvin said Monday in a statement announcing the settlement. Morgan Stanley engaged in dishonest and unethical practices and failed to supervise its employees, Galvin said.
Bloomberg reports that a slump in Facebook’s stock after it began trading in May has fueled shareholder complaints, regulatory probes and more than 40 lawsuits, with some investors claiming the Menlo Park, California-based social-network company’s managers failed to disclose revised forecasts before the IPO. New York-based Morgan Stanley didn’t admit or deny Galvin’s claims in settling.
Just days before the offering, Facebook officials privately told securities-firm analysts to lower earnings and profit estimates -- largely on the dearth of revenue from mobile users. An unidentified senior investment banker at Morgan Stanley“orchestrated” the calls to analysts, according to Galvin’s statement.
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