The details of a company’s initial stock offering can be confusing to many. In the case of Facebook’s IPO, it can be boiled down into one word: Cheating. And that earns the IPO a full share of this week’s Whiner of the Week award.
A couple of days before Facebook’s stock went on sale, the news came out from Morgan Stanley that the social media giant’s revenue would be lower than expected. It’s not unusual to have these kind of forecasts adjusted but it is a little strange that the timing of the announcement came shortly before people were preparing to pump billions of dollars into the company.
Even worse is the fact that not everyone got that information before the stock’s offering. It was only shared with some of Morgan Stanley’s big clients. That’s an unfair advantage.
The Nasdaq is also being examined for its conduct last week. Many traders bought the stock and then tried to turn around and sell it. But later they learned that their orders were not processed. This left them with big losses when the stock’s price fell sharply. Other investors say that when they bought the stock, it was for a higher price than they thought.
Investigators will be untangling this rubber band ball of financial misconduct for a long time. Who is to blame Facebook, Morgan Stanley, Nasdaq, or all of the above?
Greed seems to be the common thread in this public offering where Joe 6-Pack wasn’t given a fair chance to buy and sell.