The finger-pointing over Facebook's disappointing IPO continued Tuesday night as Massachusetts Secretary of Commonwealth William Galvin subpoenaed Morgan Stanley over one of its analyst's critical report of Facebook prior to its stock market debut.
"The Securities Division has put out a subpoena to Morgan Stanley in connection with the analyst's discussion with certain institutional investors about the revenue prospects for Facebook," a rep for Galvin told Reuters.
[More from Mashable: Morgan Stanley Delivered Bearish Forecast on Facebook Before IPO [REPORT]]
The inquiry comes after a report emerged that Scott Devitt, consumer Internet analyst for Morgan Stanley, lowered his projections for Facebook’s revenues in both the second quarter and full-year 2012, according to Reuters, which did not provide further details. Such information may not have been available to many investors before the stock was listed.
Devitt’s report may have contributed to the stock’s so-far lackluster performance. Though analysts like Devitt operate independently of the firm’s investors, it is highly unusual for the lead underwriter or a looming IPO to declare such a bearish opinion on the company at such a late date.
[More from Mashable: Nasdaq to Earmark $13 Million for Bad Trades Related to Facebook]
In response to Mashable's inquiry about that report, a Morgan Stanley rep issued the following statement:
"Morgan Stanley followed the same procedures for the Facebook offering that it follows for all IPOs. These procedures are in compliance with all applicable regulations.
After Facebook released a revised S-1 filing on May 9th providing additional guidance with respect to business trends, a copy of the amendment was forwarded to all of MS’s institutional and retail investors and the amendment was widely publicized in the press at the time.
In response to the information about business trends, a significant number of research analysts in the syndicate who were participating in investor education reduced their earnings views to reflect their estimate of the impact of the new information. These revised views were taken into account in the pricing of the IPO. "
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This story originally published on Mashable here.