What the 1% Doesn't Get

See the two blurbs from Politico's Morning Money email today. The real issue isn't what MorganStanley did wrong with the Facebook IPO. The problem isn't what was illegal about all of this, but the crime is what is legal - and how the general investor gets screwed and the 1% take care of themselves..

 FACEBOOK LAWSUIT MIND-MELD: MUCH ADO ABOUT NOTHING? - A top corporate lawyer forwarded a WSJ commentary (excerpted below) that makes the argument that despite its poor early stock market performance, there is nothing to suggest that there was anything wrong with Facebook's investors prospectus nor illegal about communications between the company's bankers and big investors. ... From the lawyer: "The WSJ piece really makes it clear that the Facebook IPO was done 'by the book' and the issue - if there is one at all - is what the current law provides. I suspect Congressional interest in this deal is likely to shift elsewhere soon - either to changes in the law going forward, or back to Nasdaq and the very odd technology glitches it faced. We may see more on that topic next week when Nasdaq's Chief Information Officer testifies before the House Financial Services Committee in a previously scheduled cyber-security hearing."
FROM THE WSJ PIECE by Ronald Barusch: "[A]t least so far, there is no indication that anything is wrong with that prospectus. ... If you bought Facebook in the IPO at $38 per share, presumably you realized that you were buying shares based on a market capitalization of the company of around $100 billion. And for that you were getting a company that has less than $14 billion of total assets ... And that last year your company had just $3.7 billion of revenue and during the last five years ... "But what about those research analysts changing their estimates? It probably could not have worked any other way under our current regulatory scheme. Analysts who work for underwriters are prohibited from publishing their research prior to an IPO. They are permitted to talk to their clients and give their views" http://on.wsj.com/MLPAPn