Facebook IPO disaster defended by Morgan Stanley CEO | WPN World People News

Morgan Stanley chairman and chief executive officer James Gorman has defended the global financial services firm's role in Facebook Inc's disastrous initial public offering, saying it had worked "100 per cent within the rules".

Gorman told an internal staff meeting that the bank had worked "100 per cent within the rules" in heading the $16 billion stock issue, AFP quoted a person who was at the meeting.

Morgan Stanley has insisted that it followed "the same procedures for the Facebook offering that it follows for all IPOs".

Gorman in an interview to CNBC denied any "nefarious activity".

"There was no nefarious activity. There wasn't any desire to obfuscate or hide [information]," Gorman said, but he admitted that several regulatory bodies are looking into the allegations.

Asked if the demand for Facebook shares had "dried up", Gorman said: "This is a complicated story."

"It was one of the most volatile openings to an IPO ever," Gorman said, adding, "It's also one of the largest, and [a company] that touches 900 million users. It's got hype in every direction."

Asked to comment on individual investors who had lost money, Gorman said: "The group of people who bought the stock ... so they'd get an enormous pop were nave." Investing for the short-term is risky, he added.

Since the May 18 IPO, Facebook shares have fallen more than 25 per cent to $29.60. The day of its market debut was marked by trading glitches as Nasdaq OMX Group Inc's Nasdaq Stock Market postponed the start of trading in Facebook by 30 minutes.

Once trading began, many investors were unable to confirm their trades.

Morgan Stanley and fellow underwriters Goldman Sachs Group Inc. and J.P. Morgan Chase Co. are facing criticism over their roles in the Facebook offering.

On May 23, a group of Facebook shareholders filed a lawsuit against Facebook, Morgan Stanley and other banks alleging that important information about Facebook's financial outlook was "selectively disclosed" to big banks ahead of the IPO.

source: Economics Industry News.Net