DC Tom Posted May 22, 2012 Share Posted May 22, 2012 Given the high profile of this IPO I would thnk if they disseminated the lowered estimates broadly it would have been all over the media. But I hear why you're saying, there are conflicts of interests in this situation. Bottom line though they made a choice to go ahead with the IPO versus make it very apparent to everyone they were at odds with the company and risk losing multi billion fee. They managed it poorly and a lot of investors - institutional and retail - got smoked, while they got their fee. Actually, Morgan Stanley probably lost more supporting the stock price Friday than they made in fees (reported as $69 million, not "billions".) That's because the investment banking side of the house was providing a service to their client - Facebook, not institutional and retail investors. Just like how they didn't "pull" the IPO, because they were providing a service to their client (and really, you think that saying "Sorry, we can't go through with this, and we're abandoning our client, because a side of the house we're legally required to not involve in the IPO changed their opinion on the underlying company, and it might not be worth what y'all have said you're willing to pay for it" is ethical?) Tell you what...why don't you go get your Series 7, then come back and discuss it. Link to comment Share on other sites More sharing options...
truth on hold Posted May 22, 2012 Share Posted May 22, 2012 (edited) I have series 7 & 63. And I can see you need a lot of education on banking and business. The money made from an IPO is a multiple of the stated fee: green shoe trading profits, selling commissions, research, secondary offerings, new offerings in the related sectors, M&A advisory, etc etc. they had a clear choice: make it known their research which is used IN SUPPORT OF THE IPO has turned less positive, or try to keep it hush hush except maybe for a few insittional investors and keep the revenue stream. And they obviously didn't lose much supporting the offering since they cut it ran and let it tank. Edited May 22, 2012 by Joe_the_6_pack Link to comment Share on other sites More sharing options...
DC Tom Posted May 23, 2012 Share Posted May 23, 2012 I have series 7 & 63. And I can see you need a lot of education on banking and business. The money made from an IPO is a multiple of the stated fee: green shoe trading profits, selling commissions, research, secondary offerings, new offerings in the related sectors, M&A advisory, etc etc. they had a clear choice: make it known their research which is used IN SUPPORT OF THE IPO has turned less positive, or try to keep it hush hush except maybe for a few insittional investors and keep the revenue stream. And they obviously didn't lose much supporting the offering since they cut it ran and let it tank. And yet, you seem to be completely ignorant on the "Chinese Wall" that Chef Jim already mentioned. So...yeah, sparky, whatever. Glad you're not my broker. Link to comment Share on other sites More sharing options...
truth on hold Posted May 23, 2012 Share Posted May 23, 2012 (edited) No Chinese wall implications. Research is used in support of IPO. Stock wasnt trading. Couldnt trade on material non public info in a regulated market You have no clue. Edited May 23, 2012 by Joe_the_6_pack Link to comment Share on other sites More sharing options...
DC Tom Posted May 23, 2012 Share Posted May 23, 2012 No Chinese wall implications. Research is used in support of IPO. Stock wasnt trading. Couldnt trade on material non public info in a regulated market You have no clue. Actually, that would be a violation of the Chinese Wall, the way you phrased it. Material non-public info from the investment banking side used on the trading side. Try again. Link to comment Share on other sites More sharing options...
bills_fan Posted May 23, 2012 Share Posted May 23, 2012 Actually, research speaks to the sales force all the time. The Chinese wall is between the research analysts and the bankers, post-Spitzer. Link to comment Share on other sites More sharing options...
Chef Jim Posted May 23, 2012 Share Posted May 23, 2012 Actually, research speaks to the sales force all the time. The Chinese wall is between the research analysts and the bankers, post-Spitzer. Research does speak the the traders all the time but only with regard to publicly released information. The wall is to prevent the analysts from talking to the traders while they're doing their research prior to the release of their reports. Imagine traders having access to research reports ahead of their release. And we know that NEVER happens. Link to comment Share on other sites More sharing options...
PTS Posted May 24, 2012 Author Share Posted May 24, 2012 Heard on the radio FB was at $33. Hopefully dude didn't buy 10K worth on Friday. I'm that dude and thankfully I didn't! I had an order ready to go but as IPO kept getting delayed I backed out. Good thing because I heard some brokers were so overwhelmed that their investors didn't know if they had purchased the stock until later that day and in some cases up until yesterday. Scottrade was a joke. They were calling people yesterday telling them their purchase of the stock went through at $42 a share after their orders were cancelled on Friday. I don't know how that is legal? They basically gave investors a $32 stock but charged them $42. From what I heard in the news, NASDAQ had a huge hiccup and when it sent all the delayed confirmations to Scottrade, their system simply couldn't process the data because of conflicting buy/sell/cancel orders. If I'm Facebook, I'm leaving NASDAQ. Way too many issues that I'm sure had a lot to do with their stock having a terrible IPO. Link to comment Share on other sites More sharing options...
HopsGuy Posted May 24, 2012 Share Posted May 24, 2012 I'm that dude and thankfully I didn't! I had an order ready to go but as IPO kept getting delayed I backed out. Good thing because I heard some brokers were so overwhelmed that their investors didn't know if they had purchased the stock until later that day and in some cases up until yesterday. Scottrade was a joke. They were calling people yesterday telling them their purchase of the stock went through at $42 a share after their orders were cancelled on Friday. I don't know how that is legal? They basically gave investors a $32 stock but charged them $42. From what I heard in the news, NASDAQ had a huge hiccup and when it sent all the delayed confirmations to Scottrade, their system simply couldn't process the data because of conflicting buy/sell/cancel orders. If I'm Facebook, I'm leaving NASDAQ. Way too many issues that I'm sure had a lot to do with their stock having a terrible IPO. It was all on NASDAQ. I have friends at several brokerage houses that had to deal with calling customers like that. And no, it's not illegal. All clients have to agree to these things. It's all in the fine print. The worst I ever had it was when an ECN once gave us hard outs on a couple hundred open orders we had so we could manually cancel them on our side. 4 hours later, I got a message that a ton of 'orphaned' messages were hitting our servers. Yup, fills on all of those orders. The ECN wouldn't acknowledge they had given us the outs. Fortunately, after we ate the fills then flattened the position the P/L was basically a push (might have been a bit of a gain). Any system would have had this problem. NYSE is just as bad because it's the same system for the most part. If the stock was at $52, no one would be complaining about their delayed fill. Link to comment Share on other sites More sharing options...
PTS Posted May 25, 2012 Author Share Posted May 25, 2012 It was all on NASDAQ. I have friends at several brokerage houses that had to deal with calling customers like that. And no, it's not illegal. All clients have to agree to these things. It's all in the fine print. The worst I ever had it was when an ECN once gave us hard outs on a couple hundred open orders we had so we could manually cancel them on our side. 4 hours later, I got a message that a ton of 'orphaned' messages were hitting our servers. Yup, fills on all of those orders. The ECN wouldn't acknowledge they had given us the outs. Fortunately, after we ate the fills then flattened the position the P/L was basically a push (might have been a bit of a gain). Any system would have had this problem. NYSE is just as bad because it's the same system for the most part. If the stock was at $52, no one would be complaining about their delayed fill. Just because it's in the fine print doesn't mean it holds up in court. And whether the stock went up or down doesn't matter. There is a clear dereliction of duty by NASDAQ, Scottrade or both. It screams of foul play. Their systems failed and now they are trying to punish the little guy. Reading through comments from Scottrade users, it looks like all references to their Facebook trades were removed from their accounts so they can no longer see the details of their trade and cancellation requests. Why do that? It's one thing if the trade is delayed an hour or two and another if an investor believes their trade was cancelled only to get a call seven days later saying your original trade went through for $42 -- and oh by the way, sorry you took a 25% hit without even having the chance to sell or limit your losses. Link to comment Share on other sites More sharing options...
DC Tom Posted May 25, 2012 Share Posted May 25, 2012 Just because it's in the fine print doesn't mean it holds up in court. And whether the stock went up or down doesn't matter. Actually, if you're placing a market order, it entirely holds up. There's no "But ScottTrade was showing a price of $38 on their web site when I placed the order!" exemption. If you don't like it, place limit orders. Or better yet: don't trade in fast markets through a company like ScottTrade - anyone who does that deserves their fate. And that includes cancelling the order, too. There's no guarantee that an order gets cancelled before it gets filled - or, for that matter, that you get a notice that the order was filled before you try to cancel it. That's not foul play. That's the risk you take trying to play a fast market through an online broker. If you don't understand that risk, you have no business trying to trade. Link to comment Share on other sites More sharing options...
HopsGuy Posted May 25, 2012 Share Posted May 25, 2012 Actually, if you're placing a market order, it entirely holds up. There's no "But ScottTrade was showing a price of $38 on their web site when I placed the order!" exemption. If you don't like it, place limit orders. Or better yet: don't trade in fast markets through a company like ScottTrade - anyone who does that deserves their fate. And that includes cancelling the order, too. There's no guarantee that an order gets cancelled before it gets filled - or, for that matter, that you get a notice that the order was filled before you try to cancel it. That's not foul play. That's the risk you take trying to play a fast market through an online broker. If you don't understand that risk, you have no business trying to trade. What he said. Link to comment Share on other sites More sharing options...
DC Tom Posted May 25, 2012 Share Posted May 25, 2012 What he said. If anyone deserves blame in this case, it's NASDAQ for not having a system to handle the volume (really, it didn't occur to anyone to stress-test the system prior to the most popular IPO in recent memory?), and Facebook for their well-intentioned but horribly pollyanna "We want to set aside a block of stock for the individual investors who made us what we are today" idea. That's like encouraging my wife to walk into a biker bar stark naked... Link to comment Share on other sites More sharing options...
PTS Posted May 25, 2012 Author Share Posted May 25, 2012 Actually, if you're placing a market order, it entirely holds up. There's no "But ScottTrade was showing a price of $38 on their web site when I placed the order!" exemption. If you don't like it, place limit orders. Or better yet: don't trade in fast markets through a company like ScottTrade - anyone who does that deserves their fate. And that includes cancelling the order, too. There's no guarantee that an order gets cancelled before it gets filled - or, for that matter, that you get a notice that the order was filled before you try to cancel it. That's not foul play. That's the risk you take trying to play a fast market through an online broker. If you don't understand that risk, you have no business trying to trade. I think you are missing the point. People placed an order on Friday, were notified it was cancelled and then were notified six days later the order did in fact go through. That would not be acceptable in 1912 let alone 2012. Looks like NASDAQ is already setting up a fund to deal with these claims but so far they only put in $13 million. Something tells me that won't suffice. For everyone's sake, hopefully FB's stock goes up. Link to comment Share on other sites More sharing options...
HopsGuy Posted May 25, 2012 Share Posted May 25, 2012 Just because it's in the fine print doesn't mean it holds up in court. And whether the stock went up or down doesn't matter. You don't get to go to court. You'll note in the fine print that you forfeited your right to sue in court in lieu of binding arbitration. The arbiters are selected from the industry and side with the brokerage firm 4 out of 5 times. And if you say you'd take the firm to arbitration over a gain, you're lying. I was a trade desk principal and the phone never rang when the client profited - and sometimes they did. If anyone deserves blame in this case, it's NASDAQ for not having a system to handle the volume (really, it didn't occur to anyone to stress-test the system prior to the most popular IPO in recent memory?), and Facebook for their well-intentioned but horribly pollyanna "We want to set aside a block of stock for the individual investors who made us what we are today" idea. That's like encouraging my wife to walk into a biker bar stark naked... This stuff gets brought up all the time. The engineer and/or the QA person goes to the product manager and expresses their concerns. The PM will then go to their boss or high management and will be told that there is no time for further testing. I know this because I was a PM for the roll out of an option trading product. I knew as well as anyone that it wasn't ready, but because some clueless VP had given a trade publication a hard date the CEO told me we had to go. Can you guess what happened? I had a lot of jobs at that shop. Link to comment Share on other sites More sharing options...
Recommended Posts