Morgan Stanley Staffers: CNBC To Blame For Facebook IPO Mess

Just deal with the Facebook IPO blame game, because it's never going to end.

Morgan Stanley staffers are reportedly blaming CNBC for overhyping the stock before its debut, the New York Daily News reports, citing a “Wall Street insider.” Pointing to stunts such as Mark Zuckerberg’s grand entrances and “Mad Money” host Jim Cramer describing the stock as a “no brainer" purchase, Morgan Stanley staffers allege that the cable channel exacerbated the hype surrounding the stock.

Even if the Morgan Stanley staffers are only blaming CNBC to deflect criticisms from the bank, they have some evidence on their side. Just a mention on CNBC is likely to send a company’s stock price up, whether the news is good or bad, according to a December study from a researcher at the University of California-Berkeley.

Facebook’s public debut last month was widely regarded as a disaster. Nasdaq glitches delayed the opening. The stock price has dropped about 16 percent since its initial debut. As of late May, ordinary investors had already lost $630 million on the IPO, according to Bloomberg. At the same time, underwriters like Morgan Stanley and other big banks took home as much as $100 million, according to multiple reports.

After the debut was widely deemed a disaster, the blame game began in earnest. Morgan Stanley, the lead underwriter of the IPO, took a lot of the heat with critics alleging the bank issued too many shares and priced them too high, according to The New York Times. The bank reportedly plans to refund some investors as a result of the mess up.

Investors also criticized Nasdaq for the glitch-filled debut; the exchange’s CEO ultimately apologized and issued $40 million in cash and rebates to investors who lost out because of the problems.

Many also viewed Facebook itself as a culprit. As of early June, the company was facing 13 lawsuits from shareholders and others over the botched IPO.