U.S. Senate Dives Into Facebook Drama
Facebook (NASDAQ:FB) stock has finally started climbing on Wednesday after three days of depressing performance, but in some more bad news for the company, the U.S. Senate is now stepping into its post-initial public offering drama.
Investing Insights: Did These Banks Profit From Facebook’s IPO?
The Senate Banking Committee is “seeking to learn more about issues raised in the news regarding Facebook’s IPO by conducting staff briefings with Facebook, regulators and other stakeholders,” according to Politico. In addition, the House Financial Services Committee is also in the process of being briefed about the situation.
The Financial Industry Regulatory Authority, an independent Wall Street regulatory body, as well as the Securities and Exchange Commission, are already investigating the circumstances of the IPO. Technical glitches had marred the stock’s opening day of trading on Friday and there were reports that underwriting banks Morgan Stanley (NYSE:MS), Goldman Sachs (NYSE:GS), and JPMorgan (NYSE:JPM) lowered revenue forecasts, but may have held back information.
Morgan Stanley and other underwriters have been blamed for lowering revenue projections not much before the launch of trading and providing that information to some investors, but not all. A group of investors has also sued Facebook and the underwriting banks for the way in which they lowered growth forecasts before going public. “We believe the lawsuit is without merit and will defend ourselves vigorously,” a Facebook spokesman said.
Facebook shares touched a high of $45 on the opening day, but kept dipping to their offering price of $38, only staying above the line because underwriters helped keep them afloat. The stock closed at $31 on Tuesday.