Morgan Stanley tries to stop Facebook investor arbitration

A Facebook investor is seeking arbitration for $1.9 million in damages from the botched IPO, but Morgan Stanley argues it shouldn't proceed because the investor isn't Morgan Stanley's customer, according to a report.

Facebook's IPO was highly anticipated by investors. Sarah Tew
Morgan Stanley, the lead banker on Facebook's messy IPO, is attempting to stop a Facebook investor from seeking securities arbitration related to the stock offering, according to a report from Reuters.

Because the investor isn't a Morgan Stanley customer, the firm has argued in a complaint filed in Manhattan federal court that the arbitration shouldn't proceed. It argues the investor, Uma Swaminathan of East Brunswick, N.J., ordered shares through Vanguard Financial, according to the report.

Swaminathan, meanwhile, has said the botched IPO has cost the investor $1.9 million in damages.

Swaminathan filed a claim with the arbitration unit of the Financial Industry Regulatory Authority in July, according to the report. FINRA is the securities industry's self-regulator, and it is often called on to help settle disputes.

If Morgan Stanley is successful in getting arbitration dismissed, it could prevent other investors from seeking FINRA aid to resolve Facebook legal disputes. That could result in expensive, lengthy court cases to settle complaints. For some investors, such a cost could be too high.

Facebook's IPO was one of the most highly anticipated offerings, with many people clamoring to buy shares of the social-networking giant. However, things quickly deteriorated, with Facebook's stock price dropping almost immediately. Investors who were excited early on have since become worried about Facebook's ability to make money and to address the spread of mobile.

Facebook and the various stock exchanges and banks involved with the IPO have faced numerous lawsuits since the offering launched in May.

About the author

Shara Tibken is a senior writer for CNET focused on Samsung and Apple. She previously wrote for Dow Jones Newswires and the Wall Street Journal. She's a native Midwesterner who still prefers "pop" over "soda."


Discuss Morgan Stanley tries to stop Facebook investor...

Conversation powered by Livefyre

This week on CNET News
Hot Products
Trending on CNET

CNET Forums

Looking for tech help?

Whether you’re looking for dependable tech advice or offering helpful tricks, join the conversation in our forums.