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Facebook, Wall Street banks under scrutiny for IPO by lawmakers, attorneys

A good old-fashioned stock certificate, for a company that's anything but.
A good old-fashioned stock certificate, for a company that's anything but.

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Call it the opposite of “like” in Facebook terms. Facebook’s troubled and high-profile initial public stock offering has come under fire from both lawmakers and lawyers alike.

Two congressional committees announced Wednesday they would conduct a preliminary inquiry into the Facebook IPO, and attorneys have filed lawsuits claiming regular investors were misled days before shares for the social media giant began trading last Friday.

The question of whether the IPO process was fair also falls onto the heads of the company’s bankers, including Morgan Stanley and Goldman Sachs, who shared a negative outlook about Facebook with a selective group of clients rather than with all investors. The chairman of the Senate Banking Committee, Sen. Tim Johnson, D-S.D., said his panel was seeking briefings with Facebook representatives, regulatory agencies and others. At least three suits filed this week have been seeking class-action status, alleging Facebook Chief Executive Mark Zuckerberg and the banks shepherding the IPO concealed critical information before Facebook went public.

Did Facebook and banks underwriting the company’s IPO mislead mom-and-pop investors?


Matt DeBord, KPCC economy reporter; writes the DeBord Report on