Morgan Stanley is prepared to refund retail Facebook IPO investors who purchased company stock last Friday, a source familiar with the matter told USA Today. The lead investment bank in Facebook?s initial public offering plans to compensate investors who reportedly overpaid.
Facebook IPO Investors Suffer Major Losses
Investors were excited about purchasing stock on Facebook IPO day, but were quickly disappointed to learn that trading was stalled by 30 minutes as a result of technical problems on the Nasdaq Stock Market.
As a result of the major glitch, investors complained that their orders were never processed correctly, which resulted in losses. Some larger market makers say their losses have?reached as high as?$100 million.
Additionally, Facebook and Morgan Stanley are facing lawsuits after the IPO fiasco. Investors alleged that analysts at the large underwriting investment banks cut their second-quarter and full-year forecasts for Facebook just before the IPO, but told?only a handful of clients.
Morgan Stanley to?Compensate Individual Investors
While Morgan Stanley has declined to comment about the lawsuits it faces,?it plans to compensate its retail investors, also known as individual investors, who paid too much on Facebook IPO day.
The source who shared the company?s plans said the firm is reviewing the orders its individual clients placed for Facebook stock, and will make price adjustments if the clients paid too much.
The person, who spoke on the condition of anonymity since they were not authorized to discuss the matter publicly, was unsure of what amount constituted overpayment. However, an investor shared that they?d placed an order at 8 a.m. on May 18 but didn?t receive confirmation of that trade until Monday (May 21) when the price was much higher than the opening bell.
Facebook stock, which fell flat on IPO day by closing?at $38.23 per share, has not experienced impressive results. On Friday morning, the stock was down 15 percent from the price of its initial public offering a week prior, trading at just $32.57 per share.
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