Fallout from Facebook’s initial public offering intensified Tuesday as the shares plunged again, and more questions arose about whether the social-networking giant’s IPO was handled properly.
Facebook shares fell $3.03, or nearly 9%, to $31 Tuesday, leaving them down more than 18% from the $38 offering price. Since the shares started trading Friday, a steady stream of negative news has plagued Facebook, centering on how the deal’s underwriters and the Nasdaq stock exchange handled the highly hyped IPO. “Facebook’s credibility has been further destroyed,” says Francis Gaskins of IPOdesktop.com.
The Securities and Exchange Commission will look into how the market functioned with respect to trading in Facebook, SEC Chairman Mary Schapiro said as she left a Senate hearing Tuesday. The SEC did not announce a formal investigation.
Also Tuesday, the Secretary of the Commonwealth of Massachusetts subpoenaed Morgan Stanley, the lead underwriter on Facebook’s IPO. The Secretary of the Commonwealth’s office confirmed the subpoena but would not provide details.
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