Widow lost savings in Facebook stock, sues all concerned for $1.9m
It says 'bumwad from Bank of Toyland' right on it
Global financial services firm Morgan Stanley is trying to get its name removed from the securities case of a New Jersey widow who lost her life savings in the Facebook IPOcalypse.
Uma Swaminathan filed an arbitration complaint with the Financial Industry Regulatory Authority (FINRA) looking for $1.9m compensation for the trading debacle. She named Morgan Stanley, Vanguard Financial Group, the NASDAQ exchange and its parent NASDAQ OMX and Facebook in her complaint, Reuters reported.
Swaminathan claims that Morgan Stanley, as the lead underwriter for the IPO, withheld the information that it was downgrading its outlook on Facebook. But the financial firm says she's not one of its customers, and that since she bought the shares through Vanguard, the arbitration has nothing to do with Morgan. The firm filed with a New York court to get its name off the case.
Neither Facebook nor NASDAQ are licensed by the financial authorities, so they are not required to take part in the arbitration. If Morgan Stanley gets out of the case, it could signal to investors that FINRA can't help them with Facebook-related complaints.
Facebook's debut in May was fraught with technical glitches, leaving investors unsure how much stock they'd bought and sold and at what price.
Swaminathan also blames her own brokerage as she claims that Vanguard didn't cancel her order for shares when she asked it to. In Morgan Stanley's case, Swaminathan said the firm informed only its own "privileged clients" that it wasn't as sure about Facebook as it had been, then issued more shares and raised the price to "suck more suckers into the stock".
She said she was "trapped" in the stock until Monday morning, when it had fallen to around $8 or $9 a share. She claims $1.9m, including $105,000 in compensatory damages, $500,000 punitive damages, $1m for "pain and suffering" and $315,000 in treble damages, awarded in instances of fraud. ®
I'm afraid she is rightly upset
I'm afraid she is rightly upset... facebook and it's bankers withheld information during the IPO that potential stock buyers would need to make an informed decision.
It was, quite literally, a classic pump-and-dump stock scan.
The fact that the crooks were multinational banks doesn't change this fact.
She invested in a stock thinking it would make you millions and was disappointed by a loss in the market.
Blame's on her shoulders alone for gambling money she needed to live on.
IMO she brought this all upon herself. Because when you deal in stocks, and know what you're doing, you'll quickly learn that you can't put your trust in individual sources of information. The fact that some company allegedly withheld information is not even relevant here; if you invest in a firm which is new on the market you should know that there are risks involved. Huge risks... Its a given.
In fact; its reasons like that why "newbies" are commonly advised not to deal with stuff like this but instead invest their money in obligations or bonds which may make less money, but its also a whole lot safer. Especially if you don't fully understand how the stock market works. Another well known unwritten rule is that if you do start investing in stocks its always a good idea to spread your 'wallet'. At least make sure that you have some 'leverage' (bonds, obligations, etc.) which can help you minimize the risks should your stocks suddenly plummet.
Look it up; those suggestions can be found all over the Net. And the most important rule of them all: Don't bet all your money on a single 'horse', especially if you don't know what you're doing.
I would expect that someone who's investing his/her life savings would do some preparing; like in the very least reading up on how this stuff actually works before you dive in.
Sorry but all I'm seeing here is someone who thought to get rich quickly, invested without understanding what she did and now lost her money. Yes, it happens. And now the whole world is to blame except for herself.
I see a direct parallel from years ago: a Dutch internet company called "World Online", at that time led by Nina Brink, also went to the stock exchange. And hundreds, if not thousands, of people were already lined up to buy their stocks.
Fun part was that if you did a small bit of calculating, like taking the opening price of the stock, then looking at the amount of company employee's, multiply that amount with the minimum wage you'd soon realize that something didn't quite add up. If you then checked up with the assumed amount of customers, then multiplied those amounts with a common price which World Online charged for their services you'd see that the rough (estimated) value of the company didn't even qualify for the opening price they charged.
Sure; this calculating was all speculation too. But at least it gave you a very good hint at what could be going on. I was tempted to buy in too; but after that calculating decided it wasn't worth the risk. Of course no one believed you if you warned friends that this wasn't a safe investment.
And looking back it turned out to be true; stock value plummeted in one single day. After a few hours they even halted the trade of the stock to avoid further damages.
Within a week the value went from (iirc) E 48,- to E 8,-.
And after all that thousands of people complained. Just like this woman does. The brokers where they got their stocks didn't provide enough information, their stocks didn't sell quickly enough, information was allegedly withheld.... All the things which this woman now claims were also used as arguments here in Holland back then.
Of course; no one got any compensation what so ever because it was all within the law. Nina Brink earned a fortune, many stock buyers lost hundreds (if not thousands) of Euro's and that was also the beginning of the end for World Online.
Even so; if you do your homework and try to prepare yourself (at least learn something about the stock exchange before diving in head first) you can avoid stuff like this.
But the last thing you should do is buy stocks with the idea to get rich very quickly. It doesn't work that way and 9 out of 10 times it'll bite you in the behinds.