Posted on 05/22/2012 6:40:24 AM PDT by SeekAndFind
And now comes some news about the Facebook IPO that buyers deserve to be outraged about.
Reuters Alistair Barr is reporting that Facebook's lead underwriters Morgan Stanley, JP Morgan, and Goldman Sachs, all cut their earnings forecasts for the company in the middle of the IPO roadshow.
This by itself is highly unusual (I've never seen it during 20 years in and around the tech IPO business). But, just as important, news of the estimate cut was passed on only to a handful of big investor clients, not everyone else who was considering an investment in Facebook.
This is a huge problem, for one big reason:
Selective dissemination. Earnings forecasts are material information, especially when they are prepared by analysts who have had privileged access to company management.
As lead underwriters on the IPO, these analysts would have had much better information about the company than anyone else. So the fact that these analysts suddenly all cut their earnings forecasts at the same time, during the roadshow, and then this information was not passed on to the broader public, is a huge problem. Any investor considering an investment in Facebook would consider an estimate cut from the underwriters' analysts "material information."
What's more, it's likely that news of these estimate cuts dampened interest in the IPO among those who heard about them. (Reuters reported exactly this--that some institutions were "freaked out" by the estimate cuts, as anyone would have been.)
(Excerpt) Read more at businessinsider.com ...
In other words, during the marketing of the Facebook IPO, investors who did not hear about these underwriter estimate cuts were placed at a meaningful and unfair information disadvantage. They did not know what a lot of other investors knew, and they suffered for it.
According to Reuters, the underwriter analysts cut their estimates after Facebook issued an amended IPO prospectus in which the company mentioned, vaguely, that recent trends in which users were growing faster than revenue had continued into the second quarter.If it was then there is no FD issue. The question of the FB communication with the analysts is pretty big. There is supposed to be a so called "Chinese Wall" between the underwriters (who are allowed to see estimates and would be told directly of forecast changes) and the analysts who can only deal with public information. If they had those discussion then there is a big issue.
My Gawd, man, this is the era of the Obamadork Admoinistration.
They don’t need no stinkin’ laws.
And...anyone who even imagined that Facebook was worth any more than the shiny-plated plastic awfulness that adorned the plastic grill of a Cadillac deserves what they get.
Facebook is as vapid as its creator.
Trigtruther Blodget knows all about fraud:
Fraud allegation and settlement
In 2002, then New York State Attorney General Eliot Spitzer, published Merrill Lynch e-mails in which Blodget gave assessments about stocks which conflicted with what was publicly published.[4] In 2003, he was charged with civil securities fraud by the U.S. Securities and Exchange Commission.[5] He agreed to a permanent ban from the securities industry and paid a $2 million fine plus a $2 million disgorgement.[6]
http://en.wikipedia.org/wiki/Henry_Blodget
Why people post his crap is beyond me.
Sneaky, unethical MONEY CHANGERS
Lol...excellent.
Pelosi and her cohorts (congress) got the word. Now when it comes out that they took the high road and didn’t buy FB stock, we’ll know the real reason why.
Will Google take over Facebook?.
The “analysts” who make these guesses as to future earnings are not allowed to receive secret material information from Facebook.
IF Facebook told these analysts secret material info that Facebook did not tell the rest of the market, then yes, we would have a big scandal.
The real scandal is the herd mentality when all these pension funds, insurance companies and so forth don’t do any of their own homework when it comes to investing their money.
If you sat down your teenage son or daughter who is on Facebook all day and forced them to read the IPO prospectus, they would come up with a better guess as to Facebook’s future than these cubicle jockeys at the banks.
Since this is a duplicate post, I can only surmise that you did not do much seeking.
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