(NEW YORK) — Since its debut on NASDAQ last Friday, Facebook’s stock has been sliding, dropping from an initial public offering price of $38 to just under $32 by Tuesday’s close.
Co-founder Mark Zuckerberg has already lost several billion dollars, considering he owns more than 500 million shares in the company.
Most felt that Facebook was widely overvalued at $38 share. And now, a potential scandal is brewing as the Financial Industry Regulatory Authority might investigate reports that as bankers were building up the IPO to the public, they were privately lowering revenue forecasts and perhaps sharing their predictions with integral investors.
Massachusetts’ Secretary of State William Galvin’s office has issued a subpoena to Morgan Stanley that seeks information about discussions the bank had with certain clients about Facebook’s IPO. Galvin wants to know if the bank secretly revealed to clients that its analysts had cut its revenue estimate for Facebook
“It is so important that we not allow this situation to go uninvestigated,” Galvin told ABC News. “Given the breadth and size of the issue and the losses that are out there it’s important that we move rapidly.”
“So many investors have lost so rapidly so much,” he added. “We intend to move quickly. We need to get answers for average American investors.”
Meanwhile, one investor is considering a class action lawsuit against the NASDAQ for computer glitches last Friday that prevented many from purchasing Facebook stock.
Copyright 2012 ABC News Radio
Heather Long, CNN
Doug Criss, CNN