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Morgan Stanley cops $5m fine over Facebook IPOcalypse

Lead bank buddy settles improper conduct claims

Internet Security Threat Report 2014

Morgan Stanley has been fined $5m for allegedly coaching Facebook on how to selectively release its financial information before its market debut.

The lead underwriter for Facebook's IPO has settled with the Massachusetts securities regulator, William Galvin, neither admitting or denying the allegations.

The banks that underwrote the IPO have been partially blamed for the stock's poor performance, with critics claiming that regular investors got one set of facts while friends of the underwriters got another. It is alleged that Morgan Stanley knew that Facebook's forecasted fortunes weren't that great, since the social network is struggling to make money in mobiles, but that it only told a select few.

Galvin claimed that a "senior investment banker" (referred to in the consent order here) at Morgan Stanley created "an unlevel playing field" between Wall Streeters in the know and Main Street investors. He charged that the banker had helped Facebookers release new information and told them how to talk to analysts about the figures.

The regulator also said that he will be continuing to look into issues surrounding Facebook's IPO, including the actions of other underwriters including Goldman Sachs and JP Morgan. ®

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