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 email@example.com
To contact the editor responsible for this story: Maura Reynolds at firstname.lastname@example.org