Did Facebook’s IPO underwriters hide bad news from the public ahead of time?

did facebooks ipo underwriters hide bad news from the public ahead of time facebookipoThe unexpected aftermath of the Facebook IPO continues. A day after shares in the company fell by 11 percent in their second day of trading – in the process, wiping $10 billion from the value of the company – news is emerging that banks in charge of the company’s initial stock offering may be facing official investigation over what is being called “selective release of negative news” about the company before stock went on sale.

Morgan Stanley, lead underwriter of the Facebook IPO, is at the center of allegations that one of its analysts, Scott Devitt, unexpectedly reduced revenue forecasts for the company in the days before the company went public. That alone is unusual – it is, apparently, not common for analysts for lead underwriters to make changes of that nature so close to an IPO – but there are additional concerns that news of Devitt’s forecast reduction was only selectively released to Morgan Stanley’s top clients instead of being more widely-shared. Additionally, some sources are claiming that analysts at fellow underwriters JP Morgan Chase and Goldman Sachs also reduced revenue forecasts ahead of the IPO, again sharing the revised information solely with institutional investors instead of making it public.

The accusations prompted an emailed statement from Rick Ketchum, chairman and CEO of the Financial Industry Regulatory Authority, that “the allegations, if true, are a matter of regulatory concern.” That’s a feeling shared by Securities and Exchange Commission chairman Mary Schapiro, who told reporters earlier today that, while she thinks “there is a lot of reason to have confidence in our markets and the integrity of how they operate,” she feels that “there are issues that we need to look at specifically with respect to Facebook.”

Morgan Stanley has already received a subpoena from security regulators in Massachusetts over the issue. Although the subpoena has not been made publicly available, state Secretary of the Commonwealth William Galvin has revealed that it was related to the revised financial projections and the sharing thereof. In response, a Morgan Stanley spokesman released a statement that the bank “followed the same procedures for the Facebook offering that it follows for all IPOs,” and that the revised forecast “was forwarded to all of Morgan Stanley’s institutional and retail investors” as well as being “widely publicized in the press at the time.”

Additionally, the statement says that, “in response to the information about business trends, a significant number of research analysts in the syndicate who were participating in investor education reduced their earnings views to reflect their estimate of the impact of the new information. These revised views were taken into account in the pricing of the IPO.” Oddly enough, however, Morgan Stanley is declining to comment on whether it has actually received the subpoena.

Facebook stock fell a further 8.9 percent today in response to the news, bringing the total drop since stock went on sale last Friday to 18.4 percent.

Home Theater

Sling TV offers free shows, a la carte subscription channels to Roku users

If you are among a select group of Roku users, Sling TV has added free TV shows and the option to subscribe to individual channels without having to subscribe to the company's base level of channels.
Mobile

Oppo could reveal a new smartphone with a 10x optical zoom

Cracking a solid zoom on smartphones has been a riddle many years in the solving. One company may have finally cracked it though: Oppo may be about to show off a phone with a 10x optical zoom.
Cars

China’s GAC Motor cruises into Detroit with all-electric Entranze concept

Chinese automaker GAC Motor brought its all-electric Entranze concept to the 2019 Detroit Auto Show. This is the third straight year that GAC has appeared in Detroit, and the company has established a design center in California.
Emerging Tech

A citizen of the universe? Dutch startup wants to deliver a baby in space

Netherlands-based startup SpaceLife Origin plans to be the company responsible for delivering the first baby born in space. And it wants to do it by 2024. Because, you know, science.
Social Media

Looking to share some content? Here's how to repost on Instagram

Ever seen a cool picture on Instagram that you wanted to share? There's no official means of reposting content on Instagram, but there are a few workarounds. We break down the two most logical choices for getting the job done.
News

Japanese billionaire splashes the cash to break retweet record

Japanese billionaire entrepreneur Yusaku Maezawa has proved again he has a knack for self-publicity after launching a cash-prize contest to break the retweet record. Maezawa is the same man who is hoping to go to the moon with SpaceX.
Photography

Photoshop fail gives Aussie leader two left feet in official portrait

The Aussie prime minister doesn't have two left feet, despite an official photograph of the leader and his family suggesting otherwise. It was, of course, a Photoshop fail, and the embarrassing snafu was soon trending on Twitter.
Computing

Make a GIF of your favorite YouTube video with these great tools

Making a GIF from a YouTube video is easier today than ever, but choosing the right tool for the job isn't always so simple. In this guide, we'll teach you how to make a GIF from a YouTube video with our two favorite online tools.
Social Media

Instagram now lets you post to multiple accounts in one tap

Instagram for iPhone now lets you post to multiple accounts at the same time. It's not the regram feature that many users have been asking for, but it could prove useful for some users who manage more than one profile.
Social Media

No yolk! A photo of an egg has become the most-liked post on Instagram

Until this weekend, the most-liked post on Instagram was of Kylie Jenner's baby daughter, which has around 18 million likes. It's now been knocked off the top spot not by a stunning sunset or even a cute cat, but by an egg.
Social Media

Invite your friends — Facebook Events can now be shared to Stories

Facebook is testing a way to make plans with friends to attend an event -- through Stories. By sharing an event in Facebook Stories, users can message other friends interested in the event to make plans to attend together.
Social Media

A quick swipe will soon let you keep bingeing YouTube on mobile devices

The YouTube mobile app has a new, faster way to browse: Swiping. Once the update rolls out, users can swipe to go to the next (or previous) video in the recommended list, even while viewing in full screen.
Web

Switch up your Reddit routine with these interesting, inspiring, and zany subs

So you've just joined the wonderful world of Reddit and want to explore it. With so many subreddits, however, navigating the "front page of the internet" can be daunting. Here are some of the best subreddits to get you started.