SEC Wants Review of Facebook IPO – Tech Thursday
Facebook seems to be be having a bad week. The Securities and Exchange Commission, the regulatory body for the stock market, is calling for a review of the circumstances around Facebook's IPO. This is due to the 9% drop in the stock as well as the accusation that the downward revised profit forecasts that were released days before the offering, but could have been leaked to a select few investors before the IPO. And to top it all off, they're getting sued by stock holders.
SEC Chairwoman Mary Schapiro said, they will be looking to see if investors were tipped off to the downgraded profit projections before the IPO causing them to sell stocks off just after the start of trading to the public. Morgan Stanley, who helped to bring Facebook to the NASDAQ, starting coming under fire for reports the bank told some VIP clients about the downward drop in the forecast. Essentially this can be considered securities fraud. And to top it all off, some shareholders got together and are suing Facebook and Mark Zuckerberg for not disclosing the downward forecast before the IPO.
Facebook's stock has been on the downslide ever since the second day of trading. Starting at $38 for the initial value, the stock had only a slight upward move it's first day, then settled back to where it started. The next day, it dropped and has as of the writing of this story, settled at $32 a share. But the damage may have been already done. The lawsuit as well as the investigation by the SEC will not be instilling confidence in investors of the social media site.
At least Mark Zuckerberg can be happy about one thing right now, and that's his marriage to his longtime girlfriend.