2 panels to launch review of Facebook IPO
WASHINGTON — Two congressional panels are reviewing Facebook’s high-profile stock offering last week amid allegations that the bank handling the IPO may have provided only select clients with a negative assessment of the company.
The chairman of the Senate Banking Committee, Sen. Tim Johnson, said late Wednesday that his panel wants to learn more about the social network’s initial offering. The banking committee seeks briefings with Facebook representatives, regulatory agencies and others.
After the briefings, Johnson said, he will determine whether a hearing should be held.
Also gathering information about Facebook’s IPO is the House Financial Services Committee. An aide to that panel said its staff is getting briefings.
The subject is likely to be raised in hearings by the committee in the coming weeks, even though no hearings are planned specifically on the Facebook IPO, the aide said. The aide spoke on condition of anonymity because the House committee’s planned inquiry hasn’t been publicly announced.
Facebook began trading publicly on Friday on the Nasdaq.
Sen. Sherrod Brown, a senior member of the Senate banking panel, said well-functioning securities markets “require transparency and accountability, not one set of rules for insiders and another for the rest of us.”
“We know that the (Securities and Exchange Commission) must fully investigate and take appropriate action if it discovers any violations,” Brown said in a statement.
Regulators are examining whether Morgan Stanley, the lead underwriter for the IPO, selectively informed clients of an analyst’s negative view of Facebook’s prospects before the stock offering. And several shareholders have sued Facebook and Morgan Stanley, alleging the IPO documents contained false statements and omitted important facts.