Source: James O’Toole / CNN Money
NEW YORK – Regulators are looking into a report that Morgan Stanley, the lead underwriter for Facebook’s initial public offering last week, shared a negative assessment of the social network with major clients ahead of the IPO.
Rick Ketchum, head of the Financial Industry Regulatory Authority, an independent regulatory body, acknowledged an article from Reuters saying that a Morgan Stanley analyst reduced his revenue projections for Facebook (FB) shortly before the offering and shared this with institutional investors.
The report has raised questions about whether certain investors received privileged information ahead of the offering that should have been disseminated more widely.
“If true, the allegations are a matter of regulatory concern to FINRA and the [Securities and Exchange Commission],” Ketchum said in a statement via a spokeswoman.
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