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FBN's Charlie Gasparino breaks down the latest with the investigation of the Facebook IPO problems.
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A big Morgan Stanley is handling at a FaceBook IPO last month put smaller investors in particular at a disadvantage while depends -- me -- ask well let's ask.
Trying to guess -- -- set exclusive info well.
-- here's something interest and we just keep this in mind FaceBook IPO was one of the these IPOs or maybe the biggest and that recent memory.
-- up the size of the IPO at the last minute that they increased to 25%.
And they did something else they increased the retail portion of this now here's where it gets really tricky for Morgan Stanley.
It went from 20% would go to -- did tune into -- into the retail meaning the small investor particularly through its brokerage network.
All the way to 26.
Okay.
As they were doing that they were giving guidance to their institutional clients their mortgage -- that FaceBook was gonna have some pretty tough headwinds in the future.
You see where I'm relatives Morgan Stanley is now trying to deflect criticism both with its clients with its own brokerage network.
We've regular with regulators about its handling of this thing whether it did the right thing whether possibly I'll say there is a possibility -- Violated securities laws if you talk to Morgan Stanley they would say listen.
We follow the book the Spitzer -- to Spitzer research regulations we were supposed to go out and give small investors any advice but guess what we can -- move vice here that's following the letter of law.
By the way you know NASDAQ -- this thing up to right if they maybe if they handle it right out of the box the way they should have ended.
And -- this would have been a forty dollar stock right now instead of whatever it is now what -- 33 -- stock which has come back it's about 16% in the last couple and Ambac last couple days -- -- won't even care about this and I do you know interest how.
But that's what Morgan State.
The mortgage -- on it -- 3130 not so not quite them today.
It and I think you know analyst Mark Cuban is a twenty -- -- but in any event Morgan Stanley is really scrambling to to sort of deflect this criticism and it faces.
Greece is essentially several layers of criticism regulators are still looking at this mayor Shapiro the other they said they and they are not -- with.
With their investigation they have they're all they have investors who are obviously annoyed.
The blame them from upping the size of the -- and increasing the size of the retail portion while -- were -- institutions -- up.
And they got their own brokers -- remembered their huge brokerage firm 181000 brokers grandstand more brokers who thought they were gonna get a 500 shares woke up and found 5000 shares in a box.
And -- -- -- so this is a big headache for Morgan Stanley it is a story that's not done yet.
I know it's so interesting if you always talk about the fingers to the NASDAQ morning -- to so many people on the possible hook for this.
What's her next -- -- what -- -- hearings going on about oil market maker yeah I think let me think our attention so.
I think the SEC is the place you really have to look and Mary Schapiro kind of hinted she said listen we're not done looking at this yet you know -- not drawn any conclusions.
You would think they would have to come out with something on this on this this coalition that you can give guidance.
To -- institutional clients by saying -- you know just so you know.
Revenues are going down and then or give the due to your retail your small investors -- really need to hold standing and holding more than.
Then -- -- in the institutions or you lose given the amended S1 and say here's here's here's there is the docket read -- if you really want and I would say I mean it is kind of a perverse sort of thing that you.
What is sure it feels like everybody sort of holding their breath and hoping -- away.
I don't think they can I mean I really think that that Mary Schapiro has to do some -- -- -- I think she's gonna.
She -- this was kind of a -- of I'm gonna put -- news kind of a loophole in in those.
In that research in this -- all goes back to 2003.
When all these firms without crummy research -- IPOs from him and gave the research reports that are institutional there at the retail clients right before the I feel them to boost demand in those research reports were highly conflicted -- -- you know.
Triple A you know both strong buys on -- from the companies and they wanted to stop that spoke which you've seen with people forget is that in the in that case.
You know the institutions knew how to read between the lines in those research reports -- care that Mary Meeker was saying -- strong buy big big nor her strong buy.
And looked at the numbers it was the retail people that that really.
Get screwed so this is this is a tricky situation.
And it's clearly not over yet I think that we rule making -- there's going to be something that we rule making on this.
As a -- rule making on and on the MF global business using customer funds I mean clearly to.
Areas where regulators need to act and you don't need Dodd-Frank to to do do stuff with this here heard here Charlie thanks.
