FB shares drop again with flotation concerns

Published:  23 May at 6 PM

Facebook's flotation has become more controversial amid reports of worries over the way advisers unveiled information to investors.

While Facebook shares dropped another 9% last Tuesday, regulators said they may look over the disclosure process to find out if some investors were given favourable access. Regulatory body FINRA and the SEC both agreed to look into the isse.

Lead underwriter of the flotation, Morgan Stanley, reported observing all applicable regulations. The Wall Street Journal and Reuters both reported that the social network giant’s advisers might have revised their market forecasts for the company, but that only a few investors were notified.

Mary Schapiro, who chairs the Securities and Exchange Commission, says there are matters that need looking into. Richard Ketchum, CEO of the Financial Industry Regulatory Authority, says there are issues of “regulatory concern".

However, in a statement, Pen Pendleton, a Morgan Stanley spokesman, said the lender had used the same measures for the Facebook flotation that it followed for other initial public offerings.

Last Tuesday, a private investor made a court order against the Nasdaq over technical issues on Friday which disrupted the social network giant’s first trading day.