Morgan Stanley, Goldman Sachs Sued Over Facebook IPO
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Morgan Stanley, Goldman Sachs Sued Over Facebook IPO
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Re: Morgan Stanley, Goldman Sachs Sued Over Facebook IPO
#2And so begins the butthurt.
Re: Morgan Stanley, Goldman Sachs Sued Over Facebook IPO
#3Do lawsuits like this happen often for IPOs? Or is this something unusual?
Re: Morgan Stanley, Goldman Sachs Sued Over Facebook IPO
#4So these people bought it at $38 or whatever. And now they've lost money because "the true facts" came out. When exactly did that happen? What's the timeline here?
Re: Morgan Stanley, Goldman Sachs Sued Over Facebook IPO
#5So these people bought it at $38 or whatever. And now they've lost money because "the true facts" came out. When exactly did that happen? What's the timeline here?
As far as I know, it's this:
Facebook's IPO roadshow started around May 7th. This was basically Zuckerberg and the underwriters going around and selling stock to investors.
On May 9th, Facebook released an updated S-1 filing to the SEC. This was made public at the time. It's here:
http://www.sec.gov/Archives/edgar/data/1326801/0001193125122...
Immediately after that, the underwriters(Morgan Stanley, Goldmans, and Merrill Lynch) updated their growth estimates downward to reflect the fact that Facebook made less money in Q1 2012 than in Q1 2011. They notified a subset of their paying clients about this. That's where part of the issue is. SEC rules also bar underwriters from making public statements about IPO's that they're involved in, which is probably the primary reason that the analysis was not made public.
EDIT: More context.
Re: Morgan Stanley, Goldman Sachs Sued Over Facebook IPO
#6This is extremely shady behaviour by these institutions. I would love to see them get severely disciplined about this by having to make good investor losses but cannot see them getting more than a smacked hand.
I always thought Facebook was overvalued at something like a PE ration of 70+ at issue but this is no excuse for the way these companies released the analyst information.
Re: Morgan Stanley, Goldman Sachs Sued Over Facebook IPO
#7Just to expand, the Guardian mentions this as well.
In essence, the lawsuit revolves around MS and GS passing bad news round internally without publicly broadcasting it publicly - a form of insider trading.
The SEC is also investigating regarding this and similar matters.
Re: Morgan Stanley, Goldman Sachs Sued Over Facebook IPO
#8Do lawsuits like this happen often for IPOs? Or is this something unusual?
I think lawsuits happen anytime there is big money to be made. Goldman, Morgan Stanley, and Facebook have hundreds of billions of dollars. They can settle for tens or hundreds of millions of dollars without batting an eye. That pays off for the lawyers and potentially the claimants in a life changing way.
Re: Morgan Stanley, Goldman Sachs Sued Over Facebook IPO
#9Call 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.
Re: Morgan Stanley, Goldman Sachs Sued Over Facebook IPO
#10Just to expand, the Guardian mentions this as well. In essence, the lawsuit revolves around MS and GS passing bad news round internally without publicly broadcasting it publicly - a form of insider trading. The SEC is also investigating regarding this and similar matters.
>In essence, the lawsuit revolves around MS and GS passing bad news round internally without publicly broadcasting it publicly - a form of insider trading.
This is silly. The bad news for Facebook was public, before the IPO. "Did not do the research" is not a defense.
http://bits.blogs.nytimes.com/2012/05/09/facebook-amends-its...
http://www.cnbc.com/id/47147457
I think that the suit against NASDAQ has some merit, especially considering all the stories about traders getting the incorrect number of shares.