Facebook IPO Fraud?

What a mess.  There is much to talk about, but there will be plenty of time to evaluate and watch this Facebook circus play out.  I want to make one simple argument at this point in time.  Apparently, a lot of big boys got burned on this IPO in addition to the retail investor, while some other big boys made the most of the situation and earned some pretty good coin despite the disappointing IPO as I pointed out in previous posts.  (I am editing this post this morning to add this article that came out today which is very good Who really won in Facebook IPO Mess?  There are a few points amiss in the article, such as the premise that Zuckerberg “just wants to make the world more connected” as opposed to “monetizing” his users to make billions and I don’t think the author realizes that some big boys got burned in this IPO that weren’t as connected as some of the bigger boys.

But, in my opinion, it is only because some big boys got burned do we hear murmurings about legal action and investigations into the IPO (LA TimesFox News).  Why I ask, weren’t there investigations when LinkedIn and Yelp experienced incredible first day pops enabling the big boys to flip their stocks and make a killing?  Isn’t a huge first day pop and then fall just as suspect as a first day flop and then decline?  I find it laughable that only now, because some big boys lost their ass, is there any type of review momentum or concern with the IPO process.  But wait, didn’t our government with support of the House, the Senate, the President, and both Democratic and Republican parties, just pass a bill (IPO Deregulation Bill) that actually further deregulates the IPO process?  When are our leaders going to take action to regulate this out of control industry?

The further one digs into how IPO’s work and how they enrich the insiders and well-connected at the expense of the retail investor (you and I) and the citizens of countries all throughout the world, the more one understands how corruption can become legalized through the lobby arms.  I have a hunch the big boys that got burned will use their power and wealth via the legal system to get reimbursed and maybe, just maybe, for once, some of those lowly retail investors might also get a little trickle down.

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About Tincup

Musings on the Human Momentum and thinking about what that means to you and I and future generations.
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10 Responses to Facebook IPO Fraud?

  1. Gilraen says:

    I agree laughable, but sadly not unexpected that they only do something when the big boys start screaming.

  2. Tincup says:

    Too bad isn’t? The idea of investing money in a new company to help it grow, add jobs, and provide investors with a fair return on a long-term basis is old fashioned. If I ever come across money in the future and nothing changes, I wouldn’t put a penny in the stock market even if I had the chance to be an inside crook.

  3. Alex Jones says:

    If the little people like me got burnt by this sort of practice nobody would say anything, I do feel happy that this has backfired on the big boys for a change.

    • Tincup says:

      Agreed A.J.! It will be interesting to see if the big boys use their wealth and the legal system to get their money. Every once and a while, they turn on themselves. You and I don’t have much more for them to take 😀

    • mijoka says:

      if you come to my restaurant , ask for veal and I sell you pork would you cry foul ? yes you would and with good reason ,
      the brokerage house cooked the book misrepresented the stock before the IPO knowing the true market value of the stock , big boy or small investors were defrauded no more no less , a fraud is a fraud .
      By the way do you really believe the big boy are not going to pass their losses on you?

      • Tincup says:

        LOL…I liked your restaurant metaphor. If I wanted Steak with reduction sauce and you gave me Mac and Cheese…then I would be really upset. In my opinion, the whole IPO process (not just the recent Facebook IPO) has become a form of fraud regardless of whether it is legal. Laws and processes can become twisted over time. But I will say this. Valuing a company is all projection full of risk and error. I worked for a valuation company and have an understanding of how to do company valuations. If you go back to Google and Amazon IPO’s, their valuations were way under priced relative to where they are performing now. In contrast, I believe all these social networking and media IPO valuations are way over-priced and do not take enough risk into account given the business models. This is why I believe, even with the Facebook IPO flop, that the industry is still in a bubble.

  4. dragonstrand says:

    This charade makes me laugh

  5. mijoka says:

    Excuse me ! or pardon me! when the brookerage house do know the price of the IPO but cook the books to make it more attractive , it is called fraud no more no less .

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