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Posted by on May 23, 2012 in Companies, Economy |

Sues Facebook, Zuckerberg and banks from entering bag

Sues Facebook, Zuckerberg and banks from entering bag

Facebook, Mark Zuckerberg and several banks, led by Morgan Stanley, were sued by shareholders who allege that the projected growth of the social network were less than what they said when opening a bag.

They are accused of hiding information to investors during the initial sale of shares, which are “inflated” price artificially. shares sold initially at $ 38. Yesterday on his second day of trading closed at $ 31.

The financial regulator said U.S. also review the status of Morgan Stanley, which lowered its projections for Facebook during the Initial Public Offering (IPO), partially informed investors.

As reported in Business Insider, banks cut their estimates for Facebook in the middle of the day of the IPO, something highly unusual. This cut can be explained because an executive’s own Facebook told analysts at banks that were handling the transaction knew that the business was weak, at least for the second quarter.

The problem is that analysts only learned of these banks, which in turn informed their major customers, but the information did not reach the other investors.

Delivery “selective” information is unfair to people who bought shares during the IPO Facebook, not knowing about these projections, and possibly violating financial laws.

Cuts earnings estimates typically negatively impact a company’s stock, especially if the reduction comes from analysts who are close to the company – in this case, banks that were handling the IPO -, who are believed to have reliable information especially.

Links:
Facebook, Zuckerberg, sued banks over IPO (Reuters)
Regulators may review Morgan Stanley-Facebook Allegations (Reuters)
EXCLUSIVE: Here’s The Inside Story Of What Happened On The Facebook IPO (Business Insider)

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