Business
Morgan Stanley slapped with Massachusetts fine over Facebook I.P.O
Morgan Stanley is now paying dearly for his involvement and role in the much troubled stock market debut of Facebook.
Massachusetts’s top financial authority on Monday fined the bank $ 5 million. This was a fine inflicted for violating security laws, the first huge regulatory action that is tied to Facebook’s I.P.O.
The secretary of the commonwealth of Massachusetts, William F. Galvin, greatly accused the bank of influencing the stock offering process in the improper manner. The regulator’s consent order asserted that Morgan Stanley’s senior banker coached and trained Facebook on how they should share information with stock analysts who often cover the company. This was seen as a potential violation of a landmark settlement that was mad with Wall Street. While Mr. Morgan never contacted the analyst, his deeds and actions put the ordinary investors at a huge disadvantage considering the fact that they lacked access to the same research and information.
In an interview, Mr. Galvin said that ‘ The broader message here is we are going to use any means possible to enforce the strict code in place about giving out information,’ he also said that ‘ We want to get the message across that if Wall Street wants to get confidence back, they can disadvantage Main Street.’
The order of consent did not mention the name of the Morgan Stanley banker although they referred to him as a ‘senior investment banker’. However, information in the regulators order showed that it was Mr. Michael Grimes, one of the most influential technology bankers in the nation.
Mary Claire, a Morgan Stanley spokeswoman said ‘ Morgan Stanley is committed to robust compliance with both the letter and spirit of all applicable regulations and laws’ the spokeswoman was trying to settle the case where she neither denied nor admitted guilt from the bank.
Mr. Michael Grim, through Ms. Delaney refused to comment through even though the technological banker was also referred to in the order as not being personally accused of any wrong doing.
The social media company’s I.P.O was among the most highly anticipated debut of the last ten years. In the warm up to the I.P.O, the interest of investors was robust thus prompting Facebook to increase the size of the offering and raise its share price to $ 38. However, the I.P.O rapidly turned into an ignominious and sudden failure. This was probably because the first day was filled with problems that made their shares fall below their offering price. On Monday, the stocks closed at $ 26.75.
