Investors and regulators raised new concerns about the $16 billion IPO after Facebook shares fell a second straight day yesterday, extending losses to 18% below the $38 offer price.
Morgan Stanley, the lead underwriter, released a statement defending its handling of the May 17 IPO after the Massachusetts securities division yesterday subpoenaed the investment bank over its communications with clients. The U.S. Securities and Exchange Commission and the brokerage industry's watchdog both said they may review the offering, and buyers of the stock have sued Facebook, Nasdaq OMX Group Inc. and the underwriters over the sale.
Investors filed suit in Manhattan federal court today against Facebook, Mr. Zuckerberg, and bankers including Morgan Stanley, Goldman Sachs Group Inc. and JPMorgan Chase & Co., accusing them of misleading them about the company's financial prospects.
