US committees to investigate Facebook IPO issues

US government committees that oversee financial sector matters are planning to look into issues surrounding Facebook’s IPO.

The probe comes after reports that an analyst for lead underwriter Morgan Stanley cut his revenue forecasts for Facebook in the days before the offering. It is unclear whether Morgan Stanley only told its top clients about the revised view or spread the word more broadly. Facebook’s first day of trading was on Friday.

Sean Oblack, a spokesman to the Senate Banking Committee, said the review would focus on "issues raised in the news" and that staff will be conducting briefings with "Facebook, regulators and other stakeholders."

Marisol Garibay, a spokeswoman for the House Financial Services Committee, said staff were also receiving briefings on the issue and "gathering information and facts."

"While no hearings specifically focused on this IPO are planned at this time, the Committee will have hearings over the coming weeks where this topic is likely to be raised," she said in a statement.

Neither committee aide said what specific issues they are looking at regarding the Facebook IPO.

In a separate statement, Senate Banking Committee member Sherrod Brown, a Democrat, called on the SEC to probe whether or not the banks underwriting Facebook’s IPO violated any securities laws.

"Effective capital markets require transparency and accountability, not one set of rules for insiders and another for the rest of us," said Brown, who chairs the Senate Banking Committee's subcommittee on financial institutions.

"There's a lot that we don't know about this IPO, but a lot that we do. We know that the SEC must fully investigate and take appropriate action if it discovers any violations."

On Tuesday, two top U.S. financial market regulators said they would explore the circumstances surrounding Facebook’s IPO.

Richard Ketchum, the head of the Financial Industry Regulatory Authority, said regulators plan to review allegations that Morgan Stanley shared negative news with institutional investors before Facebook’s IPO.

SEC Chairman Mary Schapiro also said her agency wanted to explore "issues" surrounding the Facebook IPO as well, but she did not provide specifics.

Morgan Stanley has said it has complied with all of the applicable regulations.

Meanwhile, Massachusetts state securities regulators have issued a subpoena to Morgan Stanley seeking information about its analyst's discussions with investors about Facebook.

Recent articles

Info Message

Our sites use cookies to support some functionality, and to collect anonymous user data.

Learn more about IET cookies and how to control them