The chief of the bank that some say had a hand in botching Facebook's IPO isn't apologizing for anything.
James Gorman, chairman and CEO of Morgan Stanley, the bank that was the lead underwriter for Facebook's IPO, said in a meeting on Tuesday that Morgan Stanley worked "100 percent within the rules," the Wall Street Journal reports.
He said that though it was "disappointing" that Facebook's stock price has plunged since the IPO, "speculation of nefarious activity" during the preparation for the IPO was false, according to the WSJ. He said he was not "aware of any dissent" about Facebook's steep IPO price among the banks that underwrote Facebook's IPO.
Facebook's stock price has plunged 26 percent from its $38 debut price, according to Yahoo! Finance.
Morgan Stanley has come under fire for its handling of the Facebook IPO. Morgan Stanley and Facebook are facing two lawsuits alleging that the bank's analysts had cut Facebook's revenue forecasts quietly right before the IPO and told only a handful of clients. Financial regulators also are investigating the issue.
Though Gorman claims his bank handled the IPO properly, Morgan Stanley plans to refund some retail investors that accidentally overpaid for some Facebook stocks because of glitches on the NASDAQ stock exchange. In addition, the bank plans to adjust thousands of trades.
Critics also allege that Morgan Stanley and the other underwriters overpriced Facebook at a 100-to-1 price-to-earnings ratio ahead of its debut. On average, information technology companies have a price-to-earnings ratio of 22.5, according to Yahoo! Finance. Google's price-to-earnings ratio is 18, and Apple's PE ratio is 14, according to Yahoo! Finance.
Facebook's PE ratio was 65 as of Wednesday afternoon, according to Yahoo! Finance: a sign that its stock price may have further to fall.
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