Wow. Who would have thought that just days after the biggest tech IPO in U.S. history we’d be talking scandal and possible insider trading.
Lawyers are busy weighing in about legal rules on selective disclosure because they are apparently unclear.
Regardless of whether there’s been a violation of securities laws, the very idea of problems with this IPO makes Morgan Stanley and Facebook look bad.
Facebook has been dogged by privacy issues. There have been so many accusations that the company harvests too much personal information and uses it in ways that most of us would not be pleased. Ironically, now, Facebook may not have disclosed enough of its own information to the right people.
Morgan Stanley got caught up in the subprime mortgage crisis and needed a $5 billion capital in future from the China Investment Corporation. Morgan Stanley borrowed $107.3 billion from the Fed during the 2008 crises, the most of any bank, according to Bloomberg News.
This latest investigation does not make either company look good.
The public apparently has a lot of tolerance with invasion of privacy. But there’s nothing like losing money–particularly when the principals get rich from it–to awaken the anger within all of us.
Neither Morgan Stanley nor Facebook should take this situation lightly. Morgan Stanley is regulated and trust, image are important.
The best thing Facebook has going for it is lots of people. But what happens when the people do lose faith and find another place to congregate with their friends in the virtual world?
It’s still too early to see how all this may play out. But it’s difficult to envision this ending well for either company. And just as bad, this bad news and talk of an investigation may go on a really long time.