Playing the Facebook Blame Game

The Facebook initial public offering—preceded by an epic lawsuit over ownership, an Oscar-nominated movie, a great leap forward for sweatshirts, and the constant feedback of roughly a billion customers—was always going to be more than just a financial event. It was a cultural event, too, a global party with a get-rich-quick theme. If nothing else, the poor performance of Facebook stock in the immediate aftermath of the IPO proves that on Wall Street, those who are late to the party don’t profit.

There’s more to it than that, though. Investors are faulting everything from Morgan Stanley’s role in setting the terms of the offering to Facebook’s greed and the Nasdaq. And regulators including the Securities and Exchange Commission say that they may examine the deal. “It was like the gang that couldn’t shoot straight,” says Michael Mullaney, chief investment officer at Fiduciary Trust in Boston, who says he placed Facebook orders for clients. “The underwriters misestimated what actual demand was, and there was pure execution failure coming out of the Nasdaq.”