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Facebook and big bankers
05-22-2012, 09:42 PM #1
Kreeper Griobhtha
Posts:10,851 Threads:655 Joined:Feb 2011
Facebook Bankers Secretly Cut Facebook’s Revenue Estimates In Middle Of IPO Roadshow

Quote:And now comes some news about the Facebook (FB) IPO that buyers deserve to be outraged about.

Reuters' Alistair Barr is reporting that Facebook's lead underwriters, Morgan Stanley (MS), JP Morgan (JPM), and Goldman Sachs (GS) 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.

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.

Imagine that... coffeetime.gif

Politicians hide themselves away
They only started the war
Why should they go out to fight?
They leave that role to poor
05-22-2012, 09:51 PM #2
yankees skier
Posts:5,894 Threads:215 Joined:Feb 2011
It's criminal conspiracy.

Biere.
05-22-2012, 09:54 PM #3
Kreeper Griobhtha
Posts:10,851 Threads:655 Joined:Feb 2011
It's business as usual.


coffeetime.gif

Politicians hide themselves away
They only started the war
Why should they go out to fight?
They leave that role to poor
05-22-2012, 09:58 PM #4
Octo Mother Superior
Posts:43,363 Threads:1,483 Joined:Feb 2011
Show business coffeetime.gif
05-22-2012, 11:21 PM #5
Upāsaka Member
Posts:1,383 Threads:252 Joined:Feb 2011
CIA Payday!



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