Bloomberg News

Finra Chief Says Morgan Stanley May Face Probe Over Facebook IPO

May 22, 2012

The New York headquarters of Morgan Stanley, lead underwriter for Facebook Inc.'s IPO. Photographer: Victor J. Blue/Bloomberg

The New York headquarters of Morgan Stanley, lead underwriter for Facebook Inc.'s IPO. Photographer: Victor J. Blue/Bloomberg

Morgan Stanley could face regulatory scrutiny over claims that an analyst shared negative news about Facebook Inc. (FB:US) with institutional investors before that firm’s initial public offering last week, according to the head of the Financial Industry Regulatory Authority.

“If true, the allegations are a matter of regulatory concern” to the industry-funded brokerage watchdog and the U.S. Securities and Exchange Commission, Finra Chairman and Chief Executive Officer Richard Ketchum said today in an e-mail.

Ketchum commented in response to a news report that an analyst for Morgan Stanley, lead underwriter for the IPO, lowered a Facebook revenue forecast after the social-networking company said growth in mobile products could hurt its business. Such a move could come under scrutiny from regulators if the warning was only provided to institutional investors.

Finra’s chief didn’t say whether his Washington-based agency is investigating Morgan Stanley. (MS:US) John Nester, a spokesman for the SEC, declined to comment.

To contact the reporter on this story: Steven Sloan in Washington at ssloan7@bloomberg.net

To contact the editor responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net


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Companies Mentioned

  • FB
    (Facebook Inc)
    • $79.88 USD
    • 1.48
    • 1.85%
  • MS
    (Morgan Stanley)
    • $38.51 USD
    • 0.41
    • 1.06%
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