Morgan Stanley Case Leaves Facebook With Legal Challenge

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Facebook could be exposed to legal challenges surrounding its initial public offering similar to those faced by Morgan Stanley (MS), according to legal experts.

Bloomberg reports that in the first regulatory claims to flow from the May 17 IPO, Massachusetts officials said on December 17th that they fined Morgan Stanley $5m for letting its investment bankers provide research analysts specific revenue information that was not disclosed by Facebook to the general public. That broke a decade-old rule enacted after the dot-com crash to block bankers from influencing analysts, Massachusetts said.

The settlement includes for the first time details of the closed-door conversations between Morgan Stanley and Facebook ahead of the IPO, including testimony from Michael Grimes, who led the deal for the firm. According to the consent order, Grimes wrote a script for Facebook’s then-treasurer to read to analysts that detailed Facebook’s lowered revenue estimates.

Grimes 'did everything but make the phone calls himself', the regulator said in a statement. Grimes was identified in the settlement only as a 'senior investment banker', though it provided biographical details that match his.

Hit the link below to access the complete Bloomberg article:

Morgan Stanley Case Leaves Facebook With Similar Legal Challenge

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