Morgan Stanley, Goldman Sachs Sued Over Facebook IPO • Hacker News Board

Re: Morgan Stanley, Goldman Sachs Sued Over Facebook IPO

#31

Post by mbucc » Wed, May 23, 2012, 9:46 PM UTC

fleitz wrote: post #29

trimbo wrote: post #20

Earlier quoted context omitted.

Not stating an opinion either way, but describing what the lawsuit is actually about here. Morgan Stanley's analyst, Scott Devitt, adjusted their estimates and they then gave that information to high-end MS customers, but not to the public. The question is whether or not MS has a responsibility as an underwriter to disclose that information to an audience broader than its own clients as material information about the…

They don't, there are chinese walls in between the analysis and trading groups. Research is a product most banks sell, if you don't purchase it, you don't get it.

There are supposed to be Chinese walls. If you read the article about Ted Parmigiani in last Sunday's New York Times, it seems the walls can be like the one in A Midsummer Night's dream. http://www.nytimes.com/2012/05/20/business/is-insider-tradin...

Re: Morgan Stanley, Goldman Sachs Sued Over Facebook IPO

#32

Post by MartinCron » Wed, May 23, 2012, 9:54 PM UTC

SagelyGuru wrote: post #30

gisikw wrote: post #17

I don't understand this. Selective dissemination of actual business data - fine, sue their asses. But projections are guesses - guesses without any guarantees. Facebook could magically rake in a billion tomorrow, or completely shut down - "projections" aside. Why is it that there's a legal recourse because the projections person X got were different from what person Y got?

Because the stock price people are asked to pay at an IPO (or at any time) is based primarily on projections. So, 'Mom and Pop' got projections A which made $38 sound like a reasonable price, whereas the big boys got projections B which told them to wait till the price settles on $10.

'Mom and Pop' got projections A which made $38 sound like a reasonable price

That's only half true. $38 never really looked like a reasonable price.

Re: Morgan Stanley, Goldman Sachs Sued Over Facebook IPO

#33

Post by x3c » Thu, May 24, 2012, 3:24 AM UTC

Peroni wrote: post #9

Call me skeptical but I have a hard time believing that people of their calibre failed to notice that facebook's growth projections were massively overstated. I wouldn't be surprised if this was the intention all along. They knew the projections were massively optimistic and knew they'd have a watertight case (this is pure skeptical speculation) when the inevitable happened.

Hanlon's Razor.

Never attribute to malice that which is adequately explained by stupidity.