Morgan Stanley Chairman/CEO James Gorman: ‘100 Percent Within Rules’ For Facebook IPO

By David Cohen 

Speaking at a weekly strategy meeting that was webcast to employees, Morgan Stanley Chairman and Chief Executive Officer James Gorman addressed allegations of improper conduct prior to Facebook’s initial public offering, saying that the company worked “100 percent within the rules.”

MarketWatch reported that Gorman called “speculation of nefarious activity” untrue, saying that he was not “aware of any dissent” among the underwriters and calling Facebook’s plunge of nearly $10 per share from its $38 IPO price “disappointing.”

Gorman cited the technical issues experienced by Nasdaq, according to MarketWatch, saying that traders and investors being unable to confirm their trades caused “unprecedented confusion and disarray.”

Gorman added that he spoke with Facebook Chief Operating Officer Sheryl Sandberg last Friday, and she praised Morgan Stanley, offering a professional reference for its work on the IPO.

According to MarketWatch, Gorman called out Co-Head of Global Technology Banking Michael Grimes and Daniel Simkowitz, chairman of the firm’s global capital markets business, for their work on the Facebook IPO.

The Financial Industry Regulatory Authority and the Securities and Exchange Commission are investigating allegations that Facebook, Co-Founder and Chief Executive Officer Mark Zuckerberg, and banks including Morgan Stanley concealed “a severe and pronounced reduction” in revenue growth forecast from investors, and the forecast revisions were “selectively disclosed by defendants to certain preferred investors,” rather than to the general public.

Readers: How much do you think Morgan Stanley knew?