Facebook's much-hyped IPO under scrutiny

May 23, 2012 19:23 IST

Facebook's much-hyped IPO has hit the headlines for the wrong reasons. Top US financial regulators said the Facebook IPO issues should be reviewed.

Its shares fell by 8.9 per cent on Tuesday, closing at $31, or more than 18 below their offering price. With this, Facebook has lost more than $19 billion in market capitalisation.

It is alleged that a warning on lower revenue forecasts was given to some big institutional investors, leaving out small investors.

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and its lead under writer Morgan Stanley are now accused of making selective disclosure as many smaller investors who bought Facebook shares were unaware of the lower revenue forecast.

Facebook's much-hyped IPO has hit the headlines for the wrong reasons.There are doubts on what will be the company's actual net worth.

Image: Facebook Chief Executive Mark Zuckerberg, shown in this image from Reuters video, reacts after remotely ringing the Nasdaq's opening bell at the social network's headquarters in Menlo Park, California.

Photographs: Reuters.