The attorney general of Massachusetts has begun an investigation into whether information was “selectively disclosed”. Morgan Stanley insists that it was in compliance with all the regulations that set rules for IPO behavior. Even if Morgan makes its case successfully, the news is likely to keep individual investors out of the market. Many of these investors have turned to mutual funds, ETFs, and fixed income paper to protect their interests. That behavior has been reinforced by the Facebook IPO

Douglas A. McIntyre

Among these are Visa (NYSE: V), UPS (NYSE: UPS), GM (NYSE: GM), MetLife (NYSE: MET), and Prudential Financial (NYSE: PRU) The thing that stands out most about the list is how few tech companies it has.

Google (NASDAQ: GOOG) is on the list, of course. But, most of the companies are financial ones, or firms that are manufacturing based. (Data from CapitalIQ)

Douglas A. McIntyre

An even more interesting analysis by Reuters blogger Felix Salmon, who explains how Morgan Stanley might actually have made a pile of money by propping up FB’s share price last Friday. Salmon argues that the greenshoe shares were the equivalent of a big short:

Chances are, no one outside the company will ever know for sure what Morgan Stanley’s P&L on the Facebook IPO ends up looking like. But it would make sense, if Morgan Stanley saw a lot of selling pressure on Friday, for the bank to keep [holding] onto at least a little bit of its short position into Monday morning. At which point it could make a tidy profit on that plunging share price.

Facebook’s IPO — the gift that keeps on giving.

Paul Ausick

A class-action suit on behalf of shareholders was filed in Manhattan this morning, the financial industry’s own watchdog, the Financial Industry Regulatory Authority (FINRA) is launching an investigation into the way banks communicated a cut in FB’s estimates, and shares in Morgan Stanely (NYSE: MS), FB’s lead underwriter, are down more than -2%. And short-sellers are chasing shares today too, as we noted earlier this morning. All before lunch.

Facebook is responding by testing a new design for its Timeline feature. Lawsuits and falling share prices are somebody else’s problems. At Facebook, there’s no time for such trivial matters.

Facebook has traded about 38 million shares this morning and shortly before noon the price is up 1.8% at $31.60.

Paul Ausick

Trying to discern a bottom for a stock that has only traded for three days would require all the skills of gypsy fortune-teller Madame Sousatzka. As revelation after revelation pile up about the company’s roadshow and its bankers and its CEO, one wonders what the federal investigators will have left to look for. But the chances are that faced with a hard-nosed investigation by the SEC if there’s anything left hidden, it will also be revealed. Without Madame Sousatzka’s help.

Facebook’s shares closed today down -8.55% at $31.12 in a trading range of $30.98-$45.00. Those folks who bought at the high end are no doubt feeling very bad today.

Paul Ausick

According to a report at Business Insider:

But, just as important, news of the estimate cut was passed on only to a handful of big investor clients, not everyone else who was considering an investment in Facebook.

That’s a big no-no because such information is “material” according to the SEC and selectively disseminating news about a company implies insider trading.

The SEC, along with ahandful of other government agencies, have begun investigating the Facebook IPO. As the days pass, more goodies land on their plates.

Shares are down about -2.5% just before noon, at $33.34.

Paul Ausick

The Nasdaq OMX Group Inc. (NASDAQ: NDAQ) gets the nod from some for the exchange’s inability to handle the volume of trades when the stock first began trading. Lead underwriter Morgan Stanley (NYSE: MS) gets its share of harsh words too. Even General Motors Co. (NYSE: GM) gets in line for some blame after cancelling its Facebook advertising deal. And non-stop coverage of the IPO surely could have given one the impression that this was the deal of the century.

But if you bought the stock, the real bad guy is looking back at you from your mirror. We tried to warn you.

Facebook’s shares are down about -6% at $32.01 after 20 minutes of trading this morning.

Paul Ausick

The fall-off of Facebook shares can be traced to a number of things — whether or not they are legitimate. The first is that a some traders believe Morgan Stanley (NYSE: MS) and Facebook decided, at the last minute, to flood the market with stock to raise more money for the social network. There is a rumor that Morgan Stanley cut Facebook revenue forecasts right before the IPO. Major trading issues in the Nasdaq (NASDAQ: NDAQ) system, which delayed orders and rattled investors, might have been another cause. Two days before the IPO, General Motors (NYSE: GM) pulled its ads from Facebook. That seemed to be a bit of revenge, although no one can figure out why. And, perhaps most damaging, analysts attacked Facebook’s inability to make money on its mobile presence, which raised the question of its long-term viability as a growth company.

Zynga faced none of these problems. Its only trouble was being tethered to Facebook because it gets so much revenue from the social network. Facebook’s mobile strategy eventually could effect Zynga, but the balance of the long list of reasons Facebook shares declined really do not apply to the game firm. Zynga‘s shares may have fallen consistently since mid-April, but Wall St. had begun to warm to the company after its recent, better-than-expected earnings. Citigroup (NYSE: C) started coverage of the game firm with a “buy” and a $12 price target.

The Zynga share drop is no different from the reaction traders have when they sell Ford (NYSE: F) because of poor GM earnings, or drop Yum! Brands (NYSE: YUM) when McDonald’s (NYSE: MCD) announces poor earnings. As often as not, two companies in a related sector have very different financial results, for good reasons most of the time. GM has strong sales in China; Ford does not. Yum!’s operations in the U.S. do poorly; America is a stronghold for McDonald’s. Pairings like Walmart (NYSE: WMT) and Target (NYSE: TGT) or Lowe’s (NYSE: LOW) and Home Depot (NYSE: HD) are often not pairs at all. If they really were parallel in almost every way, management skills would make no difference to results.

Zynga and Facebook may trade as a pair, but they are not one.

Douglas A. McIntyre

The Jamaican bank’s ordinary shares already are listed on the Jamaica Stock Exchange and on the Trinidad and Tobago Stock Exchange under the symbol “NCBJ,” and it has been authorized to list the shares on the New York Stock Exchange under the symbol “NCJ.”

Here is what the bank noted about its share prices on the local exchanges:

On May 18, 2012, the closing price of our ordinary shares on the JSE was J$23.69 per ordinary share, which is equivalent to US$0.27 per ordinary share, based upon an exchange rate of J$87.6425 to US$1.00 on that date. On May 18, 2012, the closing price of our ordinary shares on the TTSE was TT$1.93 per ordinary share, which is equivalent to US$0.30 per ordinary share, based upon an exchange rate of TT$6.3891 to US$1.00 on that date.

As far as the underwriters, JP Morgan is listed as the Global Coordinator and Joint Bookrunner, and Macquarie Capital is listed as the joint bookrunner; co-managers are Canaccord Genuity and CIBC.

This banking outfit claims to be Jamaica’s largest and most profitable banking and financial services group, based on consolidated total assets at September 30, 2011 and net profit for fiscal year 2011. It said:

For our fiscal year ended September 30, 2011, and the six months ended March 31, 2012, we had return on average shareholders’ equity of 23.86% and 15.55%, respectively, and, as of December 31, 2011, we had a 29.1% share of the Jamaican banking and financial services market regulated by the Bank of Jamaica, as measured by consolidated total assets.

NCBJ’s filing noted that it has 38 full-service branches and four agencies, its ATMs accounted for 34.7% of all ATM transactions in Jamaica for the six months ended March 31, 2012, and it had over 9,000 POS machines, representing 66.7% of all POS machines in Jamaica.

FULL IPO (F-1) FILING

JON C. OGG

The NASDAQ pre-market trading at 8:18 AM EST has shares trading at $37.30 on last look with 1.89 million shares having traded hands.  The pre-market high is listed as $38.50 and the pre-market low on the NASDAQ print system is $37.02.  If this holds, then the stock will be down 2.4% and the Facebook IPO will be called a BUSTED IPO.

Morgan Stanley offered significant support for this offering with a huge bidding wave at $38.00 per share on Friday.  If the firm is going to support the offering today then it better gets its checkbook out now that investors have had a weekend to digest the notion that they are valuing this company at just over $100 billion in market value.

The media hyped this thing up endlessly last week and before the deal came to market as the greatest thing since sliced bread.  It will be interesting to see how the media treats this company and its management team now that the public’s dollars are involved in playing the greatest internet growth story of the last decade.

JON C. OGG