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FBN's Charlie Gasparino and former SEC Enforcement Attorney Ron Geffner on whether the Nasdaq violated the law with the Facebook IPO.
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Good jobs stay on about Charlie were complaining three different things -- one is not tax screwed up the orders on the first day -- a scandal the second thing that.
Morgan Stanley he offered to many shares -- price too high.
But the third thing is that we're really shocked shocked that the hottest Internet stock of all time didn't go up if that stock could double afraid they will -- -- send more yeah and the fourth.
Thing and this is where becomes very clear is what to Bonnie just talk about did Morgan Stanley engage in selective disclosure here's what I know for people inside the company.
He had they did.
People inside the company have told me.
They did is illegal no pain and here's the thing went under in 1993 -- 2003 something a lifetime ago -- lot less gray air.
Ron probably had no greater but -- in any event the night in 2003.
It was a deal with Eliot Spitzer -- then attorney general which -- is huge settlement with Wall Street firms over sleazy research company analyst.
Becoming investment bank is crossing the line and giving.
Instead of like real real opinions about stocks with the investment bankers -- -- because they were paid by those investment banking fees like the -- million Morgan Stanley got from FaceBook.
In that sort of settlement.
It would it was said you could not churn and IPO ranger and an IPO you could not issue -- written research report.
That would get circulated -- your retail customers and institution's.
Right that read -- retail report people thought was -- Right now here's where what happens now in this is the loophole that occurred.
Following that guess what.
It also said in that in that settlement that research analyst and walk to investors.
Who do they talk to.
When they talk to investors.
Will they talk to institutional investors.
And that's where they underscored what was in this S1 which yes every investor got this but they did not and this is Katie.
It did not have that same and it it that same sort of talk with every retail investors would have been possible do what they should have done.
There's a system wide message to the retail sales force which they didn't do about the S1.
Let's bring Enron got her his single or partner former SEC attorney Ron -- and Charlie know each other very well I want -- later but I wanna get your reactionary dingy Harry and -- -- what Charlie just said.
That maybe they did talk to the hedge fund -- dividends and so -- that it did but wasn't illegal it right.
What -- -- this of the conversation you and I had off here at the function as what was shared wasn't material.
The Goldman Sachs JPMorgan and Morgan Stanley all.
Revised numbers in connection with the FaceBook transaction.
The allegations are against Morgan Stanley for having communicated it to certain -- Spitzer who cares it doesn't I great thus far though issued.
So then the question is if they talked about how they got their based on public information is available to everybody -- is helping the brainpower.
I -- say that's clearly not a pilot of of the law.
That being said if they brought in other -- nonpublic information that they may have possessed which no one is -- -- and yet that's then that would be a problem and I'm not hearing that.
-- -- It's kind of sleazy and his ways because.
And it's a -- by the end -- -- they don't teach a sleaze appreciation smiled at all right well are not what you're talking about is definitely not.
-- -- they went that there was an S1 filed right yes and then -- was an amended S1 about the mobile apps which I know nothing about what a mobile lab space and anyway.
I think they came out and said this shows have written that it that that status would send.
You know we revised down -- revenue numbers guess what every investor small large.
-- yes one in their -- agreement as far as we know Chenault that was new stories written about it I believe front page Wall Street Journal.
That said.
Morgan Stanley gave specific guidance.
To its large investors -- work.
Remember they can't the world written report that's okay you know it wasn't -- -- it was by war if they sent an email that he's different -- byword.
They talk to their best clients are institutional -- They do not share.
That sort of guidance background hand holding.
Probably with the people we should share -- yourself.
Yeah like there's no -- important is what's important.
This deal went largely to retail.
Remember those -- the people that got screwed.
Here -- -- it's not as if Morgan Stanley.
It now obligated when it does an IPO to let the entire world know what part what the proprietary client service side of Morgan Stanley is telling institutional -- don't have an obligation.
Let everybody was not my customer know what I let my special institutional -- -- do that.
Nobody -- yeah.
The point I thought I could just absolutely in this attorneys and former SEC lawyer -- -- so this would generally speaking you have an obligation to treat all your clients fairly.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- From -- until misrepresentation which isn't being alleged other than.
In the actions against FaceBook themselves and it's not just -- and -- kind of -- now and if the stock price had soared though wouldn't we be having this big debacle would everybody be subset of the stock had gone up instead of stalking gone up the people will be upset when the people it could get access to buy the stock exact comment.
So there's always somebody's going to complain that person -- a foul committed.
In this case it's too early to tell whether there's been a violation of law doesn't sound that based on the information haven't going what Charlie's point.
Could this have been it was.
I'm I'm well.
He's it was not obvious yeah.
This is so sleazy what they did was this and is not piloted -- think that we're violent does not violate the law what they went out there.
And might wait it's not just then that this -- This is what the whole street does when they have a retail sales and and here's why this is even worse Morgan Stanley new.
It was in tremendous demand to the retail side of the salesforce -- -- would not hand holding the people they should have handled it.
They were hand holding the people on the institutional side note is that against the law -- to have.
According to the law the letter know what's not okay Alaron -- diet.
We got to -- guys out or anyone else running after -- single we're trying to answer obviously gonna be covering the story throughout the rest in the afternoon on Fox Business -- -- -- he tells the C.
