Facebook’s initial public offering went from a spectacle to a “nightmare,” RegisteredRep.com reports, with severe repercussions for Morgan Stanley Smith Barney advisors, whose company was lead underwriter on the IPO.
Morgan Stanley was originally going to limit sales of the stock to 500 per client, and limit the number of clients who were eligible, but Facebook CEO Mark Zuckerberg reportedly wanted the company’s shares to “get into as many hands as possible,” RegisteredRep.com reports. So the offer was open to all MSSB clients, limit was increased to 2,000 shares for some clients.
What this meant was that financial advisors had to go back through their emails and reach out to all their customers who had shown interest in Facebook. “I had maybe 20 or 25 people we had put in for originally, but now that number has grown to about 60,” one Morgan Stanley financial advisor told RegisteredRep. “I looked back at all the emails and calls of people who had said they wanted in.”
The article says that with Facebook’s lackluster stock performance so far Morgan Stanley brokers are being “hammered by angry clients who feel that once again they got beat by the smart money.” However, RegisteredRep says that the MSSB financial advisors ought to remind their customers that “one trade does not a relationship make,” that this short time in the market doesn’t indicate the company’s value, and that Facebook could end up being worth the money.
In closing, RegisteredRep says that “FAs should remind clients that you have added value before Facebook and will continue to add value after Facebook.”
Written by Lisa Swan