Zuckerberg Sold, Investors Sued

A new lawsuit claims Mark Zuckerberg pulled a billion dollar fast one on Facebook. The class action lawsuit -- filed by disgruntled Facebook shareholders -- claims the 28-year-old CEO had inside info that the stock was grossly overvalued, and he protected his own financial hide by quickly unloading a ton of Facebook stock.

The suit alleges that the sale might have contributed to the weak performance of Facebook shares, which sank on Monday and Tuesday - their second and third days of trading - to end more than 18 percent below the IPO price. The $38-per-share IPO price valued Facebook at $104 billion. Institutions and major clients generally enjoy quick access to investment bank research, while retail clients in many cases only get it later. It is unclear whether Morgan Stanley only told its top clients about the revised view or spread the word more broadly. The company declined to comment when asked who was told about the research.

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Morgan Stanley Cut Facebook Estimates Just Before IPO?

When I posted last week that the Facebook IPO was an opportunity for fraud, and quoted Jim Sallah, the well-known Boca Raton securities attorney, I was talking about stock scammers, not major brokerage firms.
Reuters is reporting, under a headline Morgan Stanley Cut Facebook Estimates Just Before IPO that in the run-up to Facebook's $16 billion IPO, Morgan Stanley the lead underwriter on the deal, unexpectedly  told some of its clients that the firm was reducing its revenue forecasts for the company.

It remains to be seen whether that was fraudulent conduct, but that information, if true, is certainly going to attract the interest of regulators and customer attorneys. The impact of such a statement, in particular coming from the lead underwriter might have contributed to the weak performance of Facebook shares, which sank on Monday and Tuesday - their second and third days of trading - to end more than 18 percent below the IPO price.

Institutions and major clients generally enjoy quick access to investment bank research, while retail clients in many cases only get it later. According to the article, it is unclear whether Morgan Stanley only told its top clients about the revised view or spread the word more broadly. The company declined to comment when asked who was told about the research.

Beam & Astarita Reviewing Claims For Facebook Trading Disaster

The world's largest IPO has turned into an unmitigated disaster for NASDAQ, which was unable to handle the volume of trading on Friday, the first day of trading in Facebook shares. According to press reports, NASDAQ has admitted that it bungled Facebook's offering, and acknowledge that technology problems affected trading in millions of shares.
Thus far it is estimated that the losses will be in the tens of millions of dollars for brokerage firms, traders and investors. Beam & Astarita is reviewing potential claims by brokerage firms and investors for losses that were occasioned on Friday and again today.
Thus far it appears that brokers and traders who entered orders on behalf of institutions and retail investors did not receive confirmation of executions until hours after the fact, and even then, the reports were not correct. That forced brokers to go back to their customers, who thought their trades were executed earier in the day, and to attempt to fix the trade discrepencies for those customers.
The issue clearly goes back to NASDAQ but brokers will have to deal with the issue with their customers, and customers are getting ready to file claims against their firms, and NASDAQ for their losses.
That put the onus on brokers to determine whether or not to make customers good on trades they thought had been completed hours earlier. Wholesale market makers, the major electronic order-handling operations that handle the trading of individual investors, were seen among the worst-hit by Nasdaq's glitches due to the large number of orders that needed to be fixed for customers eager to trade in Facebook's debut.
 Nasdaq OMX officials claim that clients would have to seek "accommodation" through the exchange's rules for handling disputed transactions, but a more direct route, through arbitration or traditional lawsuits, may be the ultimate dispute resolution.
If you have been damaged by the trading in Facebook IPO shares, give us a call at 212-509-6544 or 973-559-5566, or email our team at facebookipo@beamlaw.com.

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Facebook IPO Opportunity for Fraudsters?

From the Sun-Sentinel, as the Facebook IPO arrives, not only are investors lining up for what they hope will be a golden opportunity, but so are scammers. The combination of heavy hype, potentially lucrative returns and starry-eyed novice players in the equities market have created ripe conditions for con artists to operate, according to financial regulators and securities attorneys. People are being warned to be especially careful about offers to purchase private shares of Facebook before the initial public offering (IPO) of stock expected later this week.

'It's the hottest IPO in years and anything that is hot will be exploited by scammers," said Jim Sallah, a Boca Raton securities attorney. "If you want to raise a quick $5 million, the quickest thing to do is start marketing Facebook pre-IPO shares."

Facebook's looming IPO a juicy opportunity for South Florida fraudsters, authorities say - South Florida Sun-Sentinel.com

Recession? - Visa raises $17.9 billion in record IPO

There are recessions, and then there are recessions. While prices are soaring in grocery and clothing stores, San Francisco-based Visa sold 406 million class A common shares for $44 per share, for a total of 17.9 billion.

According to Reuters, the underwriters, led by JPMorgan (there is that name again) and Goldman Sachs have the option to purchase an additional 40.6 million shares to cover overallotments, which would make the offering closer to 20 billion dollars if the entire overallotment is used.


Visa raises $17.9 billion in record IPO: Financial News - Yahoo! Finance

Supreme Court Grants Investment Banks Immunity From Antitrust Lawsuits

By a 7-1 vote in Credit Suisse Securities v. Billing, the Court gave the banks broad implied immunity from antitrust lawsuits, ruling that antitrust laws do not apply to the syndication and marketing techniques used in initial public offerings. The Court justified its conclusion in part on the grounds that the Securities and Exchange Commission is better qualified than judges and juries in antitrust cases to determine the legality of conduct in the complex field of initial offerings.

The class action was brought by investors who claimed that more than a dozen investment banks and underwriters manipulated the market for IPOs in the dot-com boom period from 1997 to 2000. The claim was that the underwriters banded together to impose requirements on IPO buyers such as "tying" -- in which buyers must buy less desirable offerings along with more popular ones -- and requiring higher commissions to be paid on later offerings. The plaintiffs claimed that these sales techniques artificially increased stock prices and violated antitrust laws.

Aside from the legal theory interest in the case, it was a significant win for the investment banks, since antitrust law provides for treble damages, which are not available under the securities laws.

The firms involved in the case included Credit Suisse; Bear, Stearns; Citigroup; Comerica Inc.; Deutsche Bank Securities Inc.; Fidelity Distributors Corp.; Fidelity Brokerage Services LLC; Fidelity Investments Institutional Services Co. Inc.; Goldman, Sachs & Co.; The Goldman Sachs Group Inc.; Janus Capital Management LLC; Lehman Brothers Inc.; Merrill Lynch, Pierce, Fenner & Smith Inc.; Morgan Stanley & Co. Inc.; Robertson Stephens Inc.; Van Wagoner Capital Management Inc.; and Van Wagoner Funds Inc. Over 900 issues were alleged to have been manipulated.