Allegations Continue To Mar Facebook IPO

Alleged questionable tactics by underwriters prior to Facebook’s initial public offering last Friday continue to surface, with the latest report involving Capital Research and Management.

The Wall Street Journal reported that one of the underwriting banks warned Capital Research at a May 11 Facebook roadshow meeting that the social network’s revenue projections were slipping.

As a result, the Journal reported, a Capital Research manager told a banker at lead underwriter Morgan Stanley Thursday night, on the eve of the start of trading, that the pricing of the stock was “ridiculous,” and some fund managers from Capital Research stayed away from the Facebook IPO altogether.

One of the most hyped IPOs in history, Facebook’s debut as a public company has been marred by Nasdaq’s technical issues, allegations against its underwriters that have led to at least one lawsuit so far, and calls for investigation by the Financial Industry Regulatory Authority and the Securities and Exchange Commission.

After opening at $38 per share, Facebook’s stock closed at $32 Wednesday, and it was trading at the exact same price at the time of this post.

Related Stories
Mediabistro Course

Podcasting

PodcastingLearn to develop, create, and launch your own podcast! On October 23, Steve Belaner, the host of the weekly podcast The Gamut, will teach you how to determine the goals of your podcast, perfect your concept, contact and book guests, market your podcast, and get your show up and running in just a few weeks. Register now!