Shareholders Sue Facebook, NYSE Comes a Calling......

[MMC]

SAN FRANCISCO (Reuters) - The fallout from Facebook Inc's messy initial public offering widened on Wednesday as shareholders sued the social network and its bankers while a trading firm revealed a massive loss on the shares and threatened to seek "remedies."

The Nasdaq stock exchange also came under further pressure as a source close to the situation told Reuters that NYSE Euronext had opened discussions with Facebook about a potential stock listing there. Nasdaq also faces litigation from angry investors.

Serious trading glitches interfered with the stock's opening on Friday, and subsequent revelations by Reuters that analysts had quietly reduced their revenue forecasts prior to the IPO have led to accusations of selective disclosure of material information. The shares closed at $32 on Wednesday, 15 percent below the IPO price.

The largest U.S. exchange later denied it was discussing a full listing transfer with the company, which became the first U.S. company to debut with a market value of over $100 billion.

Citing people with direct knowledge of the matter, Reuters reported this week that, during its IPO road show, Facebook advised analysts for its underwriters to reduce their profit and revenue forecasts.
The lawsuit named underwriters Morgan Stanley, Goldman Sachs, JPMorgan and Bank of America Corp as having cut their forecasts after the May 9 prospectus was filed, but that these cuts were not publicly revealed before the IPO.....snip~

http://finance.yahoo.com/news/shareholders-sue-facebook-nyse-comes-015429732.html

Seems Faceplate knew what was going to take place. Moreover the NYSE is no longer owned by Americans it is Owned By Deutsche Morse aka Duetsche Bank. We should have never sold the NYSE to some other Foreign Country's Bank. Geithner should be classified as a traitor to the Country.

[Beevee]

SAN FRANCISCO (Reuters)

Seems Faceplate knew what was going to take place. Moreover the NYSE is no longer owned by Americans it is Owned By Deutsche Morse aka Duetsche Bank. We should have never sold the NYSE to some other Foreign Country's Bank. Geithner should be classified as a traitor to the Country.

Well, that's a novel idea. Blame the Germans for the ills of Wall Street. Even better, now that they are the owners, apply for extradition of all the directors of Deutsche Morse as accomplices in the US economic debacle, since no Americans have been charged for placing the country into crisis.

[MMC]

Well, that's a novel idea. Blame the Germans for the ills of Wall Street. Even better, now that they are the owners, apply for extradition of all the directors of Deutsche Morse as accomplices in the US economic debacle, since no Americans have been charged for placing the country into crisis.


Who's blaming the Germans? They weren't the stupid ones to sell the NYSE. Not to mention Geithner knew that the Germans had bought up the London Stock Exchange. Good thing the Chicago Merc caught the play by the Germans and sent their azz packin.

Moreover there might not be many charged for placing the US into the crisis. But they will take the blame. Whether they want to or like it or not.

[Beevee]

Who's blaming the Germans? They weren't the stupid ones to sell the NYSE. Not to mention Geithner knew that the Germans had bought up the London Stock Exchange. Good thing the Chicago Merc caught the play by the Germans and sent their azz packin.

Moreover there might not be many charged for placing the US into the crisis. But they will take the blame. Whether they want to or like it or not.

I said it was a novel idea. I didn't claim it was yours.

[MMC]

I said it was a novel idea. I didn't claim it was yours.

Whats so novel about it? Do you think Face-Plate was in on the releasing of selective information prior to the release of IPO? What do you think about Zuckerberg coming out on top with this? Since they were his analysts who let the Underwriters of the Big Banks know they were reducing the revenues. Prior to the release of the stock.

[Conley]

The FB price would have fallen even further if it were for a couple of banks propping up the price, buying it on the market...when they stop it's really going to fall IMO. I read about the glitch earlier in the week but what can you do? Those estimates being slashed but not announced before the IPO, sounds like business as usual.

[Beevee]

Whats so novel about it? Do you think Face-Plate was in on the releasing of selective information prior to the release of IPO? What do you think about Zuckerberg coming out on top with this? Since they were his analysts who let the Underwriters of the Big Banks know they were reducing the revenues. Prior to the release of the stock.

I have no idea what goes on in the inside. Other than it won't be for the benefit of the small investor.

[Conley]

I have no idea what goes on in the inside. Other than it won't be for the benefit of the small investor.

Exactly. Good luck competing against fund managers, computer traders, insider info and who knows what else.

[MMC]

So what do you think about the NYSE/Deutsche Bank attempting to but up all of Face-Plate?

[Conley]

So what do you think about the NYSE/Deutsche Bank attempting to but up all of Face-Plate?

I don't understand what you mean. I'm sure this was an accident and I think it would have happened regardless. These systems aren't without bugs and there was huge demand for this IPO.

[Beevee]

One point regarding the issue of stock by IPO is that the same amount of information does not have to be disclosed as would be necessary under a full stock market issue.

Taking into consideration the purported size of that Company and the use of the IPO road should have been a warning for anyone who chose to participate. The underwriters certainly didn't care, their objective was to offload the stock (even at the issue price) and make a fast buck on those who don't have the knowledge the underwriters do.

[Calypso Jones]

Instead of holding hearings on BASEBALL PLAYERS, Congress ought to be looking at the scam played by facebook original investors. This technique is so old and transparent that i'm surprised people haven't hog tied and ridden these original stockholdersoutta town on a burning hot rail.

Maybe a better idea would be for Congress to investigate itself.

[Conley]

It would be something if those guys actually did their jobs, hmm? Then again considering how badly they bungled the baseball stuff I don't think their simple minds could tackle anything like corruption on Wall Street.

[Conley]

One point regarding the issue of stock by IPO is that the same amount of information does not have to be disclosed as would be necessary under a full stock market issue.

Taking into consideration the purported size of that Company and the use of the IPO road should have been a warning for anyone who chose to participate. The underwriters certainly didn't care, their objective was to offload the stock (even at the issue price) and make a fast buck on those who don't have the knowledge the underwriters do.

Good thought, but at some point the foolish have to pay the price, right? Can the government step in and save uneducated investors? Should it even try?

[Beevee]

Good thought, but at some point the foolish have to pay the price, right? Can the government step in and save uneducated investors? Should it even try?

If the investigation (or if there is an investigation) searches for the information that should have been made public but wasn't, someone will take the hit for it. But it's a money thing, so there won't be any jail time and people who chose to invest have always been the last to benefit when involved as outsiders to the Stock Exchange.

Of one thing people can be sure. Those at the top and in the know made a killing.

[Conley]

Morgan Stanley and other underwriters have made a profit of about $100 million stabilizing Facebook Inc. stock since trading began on Friday, people familiar with the matter said.

As the lead underwriter responsible for Facebook’s IPO, Morgan Stanley would receive the largest chunk of those profits, the people said. The bank would receive the money on top of millions of dollars in IPO fees, the people added.

These gains are expected to be offset somewhat by losses associated with reimbursing clients who lost money because of technology snafus at the Nasdaq Stock Market in Facebook’s first day of trading, one of these people added.

It’s not unusual for underwriters to see gains from stabilizing new stock offerings.

Morgan Stanley was the stabilization agent for Facebook’s IPO, meaning the bank was in charge of an overallotment of about 63 million shares that can be used to help support Facebook’s share price.

IPO underwriters are typically allowed to oversell an IPO by 15%. In Facebook’s case, this meant that underwriters bought from the company the offering’s 421,233,615 shares, but sold into the market 484,418,657 shares. Doing so made the underwriters “short” 63,185,042 shares. The underwriters are given the option to buy the overallotment of shares from the company at a discount.

http://blogs.wsj.com/deals/2012/05/23/morgan-stanley-other-underwriters-make-100-million-profit-on-facebook-ipo/

Not bad, but not a lot of money by these guys' standards.

[RollingWave]

woohoo, rich people sueing other rich people over money, so exciting! :rollseyes:

[Calypso Jones]

woohoo, rich people sueing other rich people over money, so exciting! :rollseyes:

Not necessarily...what happened is that people like Bono and others on the inside knew what the deal was. They knew that this was a strategy to get them out at fantastic rates and leave smaller duped investors holding the bag. Not everyone is in on the deal. And it's a dirty deal..and it's done by the elites of Facebook.

[Shoot the Goose]

I don't understand what you mean. I'm sure this was an accident and I think it would have happened regardless. These systems aren't without bugs and there was huge demand for this IPO.

Its a bit more than that here. The stock was hyped, certainly, but it was also set up for sale so that regular "retail" stock buyers, such as you and me, with our Scwab and E-trade accounts, could buy. Usually IPO's just go to the big banks and funds. The advantage to have the retail buyers in is that we are so much more easily caught up in the hype, and we tend to jack up the price based solely on emotion.

But the NASDAQ clitches were such that when folks like you and me went to sell, via our Schwab account, etc., NASDAQ couldn't handle it. Meanwhile, Schwab is on the hook for the price we "sold" at, while NASDAQ could not book it at that price due to the glitches causing delays. And the price kept falling, such that Schwab was saddled with that expanding loss, being obligated to you and me at one sell price, but unable to complete the transaction at that price. While the stock fell. Here is the quote from Conley's post above that references this:


These gains are expected to be offset somewhat by losses associated with reimbursing clients who lost money because of technology snafus at the Nasdaq Stock Market in Facebook’s first day of trading, one of these people added.


I use Schwab as an example, but it was actually several other companies that got screwed here. Citadel was one. They have asked for relief, totaling into the 100's of millions. Will probably get it.

While the set-up for retail purchase was legal, and the advising to the big banks that the revenue projections were down-graded was likely legal, the little guy was teed up to be "Zuckered" here. Or as one headline said, there's a "Zucker born every minute".

[Conley]

Thanks for the explanation STG, I didn't realize this IPO was open to the little guys. Just another way of pumping up the hype or is this the future for more IPOs? I thought they were usually only open to the big guys, and that there were rules in place about how long you had to hold it.

Letting everyone and their grandma in on this stock and still having it sink seems like yet another red flag on FB.

[Shoot the Goose]

Thanks for the explanation STG, I didn't realize this IPO was open to the little guys. Just another way of pumping up the hype or is this the future for more IPOs? I thought they were usually only open to the big guys, and that there were rules in place about how long you had to hold it.

Letting everyone and their grandma in on this stock and still having it sink seems like yet another red flag on FB.

Here's a paste from one of the articles where I got info:


The ugly details go something like this: The much-anticipated IPO ensured Zuckerberg’s place among the world’s richest people, with a net worth in the $15 billion range. The big banks that brought the company public earned between $100 million and $200 million. The Nasdaq, where Facebook shares are listed under the symbol FB, took its pound as well.
The average investor, meanwhile, took it on the chin. Many bought shares at the high of around $42 a share, only to watch the stock fall like a brick over the next couple of days.

Traders tell me that most small investors bought shares at their highs and — because of Nasdaq system failures — couldn’t sell out quickly enough when the stock began to fall.

The scary part is that screwing the little guy may have been by design.

Facebook officials said they wanted a chunk of the offering to be handed to the public — supposedly to give the average investor the same chance to take part in this historic IPO “experience” as a Wall Street fat cat.

But Wall Street regulars know that the usual reason to include “retail” investors in an IPO is that they’re more gullible than the pros and will bid up shares higher than more savvy market players.

Sophisticated market types have access to more and better data, and that was clear in the Facebook IPO, too. For all Zuckerberg’s rhetoric about sharing information, lead underwriter Morgan Stanley concedes it gave special guidance about Facebook’s growing financial obstacles to its best clients while keeping its small investors largely in the dark. (The move, it appears, didn’t violate securities laws because Morgan didn’t put its guidance in writing.)

Read more: http://www.nypost.com/p/news/opinion/opedcolumnists/warm_fuzzy_vultures_0zYh6KrtlkCc6QOwvUSnDK#ixzz1vt i8pE6Q

[Shoot the Goose]

Here's a little bit more about the losses booked by such as Citadel Investment Group


Citadel Is Latest Firm With 'Significant' Facebook Losses

Citadel Securities, the retail arm of Ken Griffin’s Citadel Investment Group, has become the latest firm to report “significant losses” from Facebook (http://data.cnbc.com/quotes/FB) trades on behalf of clients, according to people familiar with the situation.

read more: http://www.cnbc.com/id/47554054


They got pinched in the technical snafu at NASDAQ.