Regulators' concern over Facebook IPO

Wed, May 23, 2012, 01:00

Facebook’s shares fell sharply again yesterday and two senior US financial regulators called for a review of the circumstances surrounding its troubled initial public offering last week.

The calls for a review, by US securities and exchange commission chairwoman Mary Schapiro and US financial industry regulatory authority chairman Rick Ketchum, added pressure on the company, its underwriters and the Nasdaq, all of which have taken blame for the stock’s harried opening and sharp decline.

After Monday’s 11 per cent plunge, Facebook shares were down 5.9 per cent at $32.01 by mid-afternoon. At that price it has shed more than $16 billion in market capitalisation from its $38-per-share offering price last week.

Reuters reported late on Monday that the consumer internet analyst at lead underwriter Morgan Stanley cut his revenue forecasts for Facebook in the days before the offering. JPMorgan Chase and Goldman Sachs, also underwriters on the deal, revised their estimates during the road show, according to sources.