After the Nasdaq botched Facebook's debut, is the company considering listing on the NYSE?
By Roland Jones
Facebook is facing more controversy Thursday, including reports the company is evaluating the possibility of switching its stock listing from the Nasdaq stock market to the New York Stock Exchange.
The report follows news Wednesday that Facebook, its founder Mark Zuckerberg and the banks running its initial public offering have been sued by disgruntled shareholders, who argue that the social network?s revised growth figures were disclosed to a select group of clients, rather than broadly with all investors, ahead of its offering.
U.S. regulators have already said they are investigating how the IPO was handled. Morgan Stanley, the lead underwriter on the deal, says it has fully complied with the rules for IPOs.
The New York Stock Exchange is seeking to capitalize on Nasdaq?s role in Facebook?s botched IPO, according to The Wall Street Journal, and has sounded out the social network about a listing switch, exchanging ?several emails? with the company, raising the possibility of moving to the Big Board, the Journal said.
However, the NYSE has denied there were any discussions with Facebook, the newspaper noted.
Related: Facebook's dream IPO is starting to look like a nightmare
A separate Bloomberg News report Thursday says Morgan Stanley?s Chief Executive Officer James Gorman was present on a conference call between investment bankers and Facebook executives to arrange the terms of the social-networking company?s IPO.
They faced a trade-off, Bloomberg said: ?Set the IPO price low and give up enough money to let investors profit from a day-one pop -- or push the price high to help the company reap as much as possible from the sale.?
Facebook Chief Financial Officer David Ebersman?s aim ?was to maximize the company?s IPO proceeds and to cap the first-day increase at 10 percent,? according to the report.
Facebook reportedly set aside some 25 percent of its shares for regular retail investors -- or about 105.3 million of the 421.2 million shares the company said in a regulatory filing that it expected to sell in its public offering.
If that group of retail investors had bought their stock at the IPO price of $38, by Wednesday?s close the value of their collective investment would have declined by $631.8 million, or 16 percent, based on the closing price of $32 and assuming those investors have not sold the stock.
While major investment houses and hedge funds were allocated stock in Facebook before it went public, individual investors had to wait until after the IPO to buy shares in Facebook.
Related: Did you buy shares in Facebook?
Critics say the underwriting banks set the price of the Facebook offering too high and sold too many shares to the public, and the IPO debacle is raising broader questions from regulators about the fairness IPO process.
Shares of Facebook edged higher Thursday. The social network?s stock closed Wednesday at $32, down 16 percent from its $38 IPO price.
After the close of stock market trade on Wednesday, electronic trader Knight Capital Group said it suffered a pre-tax loss of $30 million to $35 million on the botched Nasdaq trading debut of social media giant Facebook and is demanding the exchange compensate that amount.
The loss, which Knight said will be recorded in its second-quarter results, was due to numerous problems related to the Facebook initial public offering.
Reuters contributed to this report.
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