State of Massachusetts Fines Morgan Stanley For $5 Million Because Of Facebook IPO
The state of Massachusetts has fined Morgan Stanley $5 million because of the botched Facebook IPO. After Facebook went public this past May, stock traders were riddled with system errors. A lot of people lost money as a result. The company’s stock price opened at around $38 per share and today it is trading at $27. Back in September, the company was trading at as low as $17.79.
After the system errors took place, regulators have been looking for someone to blame and it appears that investment banking company Morgan Stanley will be penalized. Morgan Stanley, the lead underwriter of the IPO, was hit with a fine of $5 million by the state of Massachusetts. Regulators have also been investigating whether the banks that underwrote Facebook’s IPO improperly shared relevant financial information only with certain parties and out of the hands of the public.
The Massachusetts Secretary of State William Galvin subpoenaed Morgan Stanley over that specific issue and it is believed that the $5 million fine was related to that investigation. Earlier Citibank was fined $2 million for not keeping track of employees who shared non-public information about Facebook’s IPO.
Facebook is currently in the midst of dealing with a class action lawsuit where investors claimed to have lost $7.1 million. Facebook supposedly did not detail their financial health before their launch on the NASDAQ.