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 In a statement Tuesday, Secretary of the Commonwealth William Galvin
said his office is investigating whether Morgan Stanley selectively
divulged to some clients that its analyst had cut his revenue
estimate for Facebook. Morgan Stanley was the lead underwriter for
Facebook's IPO.
The analyst's revision followed an amended filing by Facebook in
which the company said a shift by many Facebook users toward mobile
devices might limit its revenue growth.
Facebook's stock slid further Tuesday on its third trading day,
dropping 9 percent to $31. The social networking company has fizzled
since its long-awaited public offering last week at $38.
Rick Ketchum, head of the Financial Industry Regulatory Authority,
said that if the allegations against Morgan Stanley are true, it
would be "a matter of regulatory concern" to FINRA and the
Securities and Exchange Commission.
FINRA is the securities industry's self-policing organization.
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If Morgan Stanley gave revised information on Facebook to favored
clients, it would mean retail customers and others weren't able to
benefit from the same information before Facebook went public.
SEC spokesman John Nester declined to comment.
[Associated
Press]
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