Financial services corporation Morgan Stanley has agreed to pay a $5m fine to settle charges that it improperly handled crucial information regarding Facebook’s earnings ahead of the social network company’s dreadful initial public offering.
A Massachusetts securities regulator charged that Morgan Stanley coached Facebook on how to present lowered earnings estimates to company analysts, Phys.org reports.
Those estimates, made days before the initial public offering closed, were not disclosed to all investors as the corporation set a high issue price and increased the number of shares on sale.
Facebook shares collapsed after the first day of trade on May 18th, ultimately falling to just half of the $38 IPO price. That fall angered several institutional and retail investors, who claimed they’d been misinformed about the company's earnings forecasts.
Massachusetts secretary William Galvin also stated Morgan Stanley had violated securities industry rules against unethical and dishonest conduct. The corporation agreed to the fine without either admitting or denying the charges.