As Facebook’s share prices continue to fall, US regulators have called for a review of last week’s Initial Public Offering (IPO) of the world’s largest social networking site.
The financial services group Morgan Stanley has been ordered to account for its handling of the sale of Facebook’s shares.
Of particular concern for regulators at the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FIRA) is a report that the consumer internet analyst at the stock’s lead underwriter, Morgan Stanley, cut revenue forecasts for Facebook in the days before the offering, information that may not have reached many investors before the stock was listed.
Traders questioning whether the initial share price was realistic to begin with have been further shaken by the company’s decreasing value on the NASDAQ.
On Friday, the day of the IPO, the firm was valued at over $100bn but that has has been more than decimated, dropping by $16bn in under a week.
Al Jazeera’s Dominic Kane reports.