Top Firm Fined Over Facebook

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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.

Hit the link below to access the complete Bloomberg article:

Morgan Stanley Fined $5 Million by State Over Facebook IPO

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