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. ®