Who is brokering facebook ipo

Mindful that customers would be frustrated, Morgan Stanley Smith Barney early on distributed a script to its brokers on how to handle requests from clients, said one veteran broker.

Other brokerages are in the same boat. Loyalty helps: Fidelity customers who have being doing business with the firm for the longest periods get higher priority in the IPO food chain. Whether it is fair to everyone is another question. But he has no idea how many shares he might ultimately receive.

The online brokerage, which typically caters to small investors, is one of 33 firms named by Facebook to distribute its newly issued shares. For Mark Zuckerberg, selling Facebook shares on the public market had a clear downside. Besides the headache of releasing a company's financial details to the public, he worried that increased scrutiny and push for profits would compromise Facebook's mission.

But like any growth-stage company, Facebook needed money, and private companies face restrictions on how much stock they can issue for cash.

In early , Goldman Sachs helped Facebook conjure IPO-type money without an actual IPO by creating a special investment product to sell its private shares to Goldman's wealthiest clients. Soon after, Zuckerberg decided to take the company public. On February 1, , Facebook filed its Form S-1 -- effectively a birth certificate for publicly traded companies -- containing everything an investor needs to know before buying shares at an IPO, including basic financial information and the business model.

The S-1 is especially meaningful to investment banks. Facebook listed its underwriters -- the banks picked to buy and sell shares on the IPO -- near the front of the document, from left to right, in order of responsibility, with Morgan Stanley in the coveted "left lead" position.

This put Facebook's IPO in the hands of one of Silicon Valley's most celebrated bankers: Michael Grimes, co-head of global technology banking at Morgan Stanley's Menlo Park office, located just a few miles north of Facebook's headquarters. Michael Grimes, the son of a mapmaker, is a lifelong Californian with a bachelor's in computer engineering from UC Berkeley.

A titan in the world of tech IPOs, his status grew not only from expertise in taking small and large digital companies public, but also from his myth-making showmanship. To win Ancestry. To get a Hewlett Packard acquisition, he waited outside an executive's office for hours just to make a pitch. With Grimes and the investment bank prepping the offering and building demand for shares, it fell to another Morgan Stanley employee, Scott Devitt, to tell outside money managers whether they should buy Facebook stock.

As the head of Morgan Stanley's Internet equity research team, Devitt makes a month target price for stocks and provides a rating -- buy, hold, or sell -- for hedge funds like Citadel and large, storied institutional investors like Fidelity.

Devitt's agreement with his clients guarantees an independent analysis of company performance -- even if Morgan Stanley is leading the IPO. The stark division between these two functions of a bank is known as a "Chinese Wall. Morgan Stanley and other brokerage firms were slammed with fines for repeatedly breaching the "Wall" during the dot-com boom.

In the aftermath of the Facebook IPO, the bank would find itself under the spotlight yet again for allegedly sharing key, private information with wealthy clients. A roadshow -- a city-by-city promotional tour where executives drum up support for their IPO before large investors -- is typically a lackluster affair. Facebook's was more like a Hollywood party.

A crowd of paparazzi greeted them, and a long line of onlookers wound around the hotel building. Inside the meeting, Facebook played a video introducing the business model to special clients of its underwriting banks. Although an IPO roadshow is supposed to be an untarnished hype-machine for a company's prospects, back in California, those prospects were hurting.

Facebook's new internal forecasts showed revenue growing slower than expected. The reason: Users were flocking to smartphones faster than the company could serve mobile ads. On the first day of what may have been the most watched IPO roadshow in memory, Ebersman confessed to Morgan Stanley that Facebook had cut revenue projections -- a nearly unprecedented last-minute correction in an IPO of its scale.

Even if the changes were small, statistically, in IPO showbiz statistics run second to momentum, and nothing kills momentum like a poorly timed downward revision. Facebook and Morgan Stanley knew they had to make a public disclosure. But what to disclose? The law requires companies to share all information that would likely influence an investor's decision to buy stock. Plus, Morgan Stanley's research team was still advising clients based on figures that Facebook now considered wrong.

With less than a week before the IPO, they came up with a solution that they thought would spare Facebook a modicum of embarrassment -- but would have fateful consequences for Morgan Stanley and investors:. When a company makes an amendment to its S-1, the entire document can be filed again, without track-changes or highlights to specify the changes. When Facebook filed its "Amendment No. On page 14 and 17, the company said that its users were growing faster than ads due to the increased use of mobile phones and product decisions that allowed fewer ads per page.

On page 57, Facebook said the mobile trend discussed elsewhere in the document had continued in the second quarter, due to users shifting from computers to phones. None of the changes suggested any major revision to Facebook's financial outlook. Facebook's lowered revenue estimates did not appear in the S-1, nor was there any precedent requiring these numbers to be included. Author of this article Andras has over 4 years of experience analysing and trading equities and bonds.

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He's eager to help identify the characteristics of specific brokers, so the best match can be found for each client. Andras has over 4 years of experience analysing and trading equities and bonds. TradeStation tastyworks. Follow us. Visit broker. Interactive Brokers is a US discount broker. Free stock and ETF. Then it packages them into private investment funds. For more than a year, in emails sent to anywhere from 10 to people, according to the company, Felix actively promotes, sometimes with a sense of urgency.

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