Things could get ugly for this big bank…
Posted by Michelle Heath in News, tags: bulge bank, equity underwriting, Facebook, FINRA, investigation, IPO, morgan stanley, revenue, rueters, SEC, social network, startups, tech
Today, the Facebook black hole sucked yet another casualty into their never-ending post-IPO news onslaught: Morgan Stanley. The bulge bank is currently under investigation by regulators for their potential involvement in some Facebook pre-IPO foul play.
As the lead underwriter of Facebook’s IPO, Morgan Stanley apparently had some inside info on the social network in regards to the future success investors could see after the company went public. Rueters reported that a Morgan Stanley analyst had downsized his revenue projection for Facebook after the network filed documents with the SEC stating there was a chance their revenue could struggle as it’s users attention was turned to mobile devices. The question now that’s ruffling feathers of the FINRA and SEC members is ‘did certain investors receive privileged pre-IPO information that should have been shared more liberally?’
This allegation brings up a very interesting correlation: how the massive influx in tech startups, and in technological advancements in general, is affecting the big banks. For Morgan Stanley, it’s in equity underwriting. An article on CNNMoney revealed the firm has landed deals to underwrite IPOs of some of the biggest names in the web biz, like LinkedIn, Groupon, and of course, Facebook – which have all generated $1.2 billion in fees. As the tech revolution keeps on trucking, Morgan Stanley becomes increasingly reliant on its tech deals for revenue generation. Right now, 13% of their investment banking fees are produced by these deals (Goldman pulls in about 9%, while JPMorgan takes 7% of theirs from tech).
Now this is where things could get messy for Morgan Stanley. If the looming Facebook-IPO-info situation does blow up, their juicy chunk of equity underwriting fees could be looking a little less hearty – fast.
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