Will Facebook Inspire Congress to Rewrite the IPO Rulebook?

Facebook’s (NASDAQ:FB) high-profile IPO last week is being reviewed by two congressional panels looking into allegations that the bank handling the IPO may have provided only select clients with a negative assessment of the company.

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Senator Tim Johnson (D-S.D.), chairman of the Senate Banking Committee, said Wednesday that his panel wants to learn more about the social network’s offering, seeking briefings with Facebook representatives, regulatory agencies, and others to determine whether a hearing should be held.

The House Financial Services Committee is also gathering information on Facebook’s IPO through briefings, according to an aide to that panel. Though no hearings are yet planned specifically on the Facebook IPO, the subject will likely come up in hearings by the committee next week, the aide said.

Senator Sherrod Brown (D-Ohio), a senior member of the Senate banking panel, said in a statement, “We know that the (Securities and Exchange Commission) must fully investigate and take appropriate action if it discovers any violations,” adding that well-functioning securities markets “require transparency and accountability.”

Regulators are looking into whether Morgan Stanley (NYSE:MS), the lead underwriter for the IPO, informed select clients of an analyst’s negative view of Facebook’s prospects before its initial stock offering.

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