Richard (RJ) Eskow - 10 Reasons You Should be Suspicious of Wall Street's Facebook Fiasco
May 24, 2012 Three of Wall Street biggest and best-known financial institutions handled the Facebook IPO, so why were people immediately suspicious when the stock soared and then promptly tanked? Easy answer: Because three of Wall Street biggest and best-known financial institutions handled the Facebook IPO.
Each of them - Morgan Stanley, Goldman Sachs, and JPMorgan Chase - has a history of exactly the kinds of unethical and/or illegal behavior that might, just might, explain what happened with Facebook.
Mark Gongloff offers a good overview of Mr. Zuckerberg's Wild Ride, in which a stock that was offered at an IPO price of $38 soared to $45 and then plunged to its current (as of this writing) price of $31. A lot of people lost money - which means a lot of people made money, too.
Zuckerberg promptly sold his 30.2 million shares, netting a quick billion dollars and change. That tells you what he thinks of this investment.
Here are ten reasons why it makes sense to be suspicious of the Facebook IPO, starting with the fact that any overview of the three institutions which handled it might best be described as "rounding up the usual suspects":
1. Morgan Stanley has a history - and a culture - of tricking their own clients into making lousy investments.
It was Morgan Stanley's brokers who, in one notorious account, loved to brag "I ripped his face off!" after convincing one of the firm's own clients to buy a stock that the firm knew was lousy. (See Frank Portnoy's account in Fiasco.)
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