Thread: Facebook Fate
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Old May 28th, 2012, 12:15 PM
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GregLee GregLee is offline
Join Date: May 2005
Location: Waimanalo
Posts: 770
Default Re: Facebook Fate

Originally Posted by tutusue View Post
Case? Is there a lawsuit we users should be aware of?
No, but there are some lawsuits. If I've got it straight, some people are suing NASDAQ because they couldn't successfully buy the Facebook shares that they wanted, and some people are suing JPMorgan-Stanley, who handled the IPO, for not informing small, retail investors about some business problems that would likely lower Facebook's future profits, making the FB shares worth less. FB knew, FB insiders knew, the investment bank knew, but they all kept quiet, so the big boys could unload their shares at the full initial price of $38 to the suckers, before the price sank when the news became public.

But JPMorgan-Stanley and FB seem to have a really good defense. They say that they didn't yet know about the bad news until the prospectus for the IPO was already printed up and distributed. And there is a law that prohibits them from disclosing any material information about a company doing an IPO that is not in the prospectus. They couldn't legally release the bad news until after the IPO event and retail investors had already bought up all those $38 shares from the insiders, who were very pleased to sell at this price, since they knew the price would be going down very shortly. As it now has.
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