Financial Regulatory Forum

By Helen Parry, additional reporting by Julie Dimauro

LONDON/NEW YORK, May 25 (Thomson Reuters Accelus) – Facebook’s chaotic initial public offering has sparked much speculation and legal action based on the idea that securities laws and regulations over disclosure may have been breached, which would leave Facebook and others involved in the offering process liable to potential regulatory enforcement or civil liability for losses caused to investors.

An analyst at lead underwriter Morgan Stanley cut his revenue forecasts for Facebook in the days before the offering, information that may not have reached many investors before the stock was listed, Reuters has reported. (more…)

By Jason Wallace

NEW YORK, May 25 (Thomson Reuters Accelus) – A state regulator’s letter to an investment advisory firm outlining shortcomings in the firm’s use of social media also gives an early clue to how regulators will scrutinize the financial industry’s growing use of services like Facebook and LinkedIn.

The “exam deficiency” letter was provided by a source familiar with the case to Thomson Reuters on the grounds that neither the source nor the target of the letter be identified. Such letters, which specify areas in which a firm’s regulatory compliance falls short, are issued by a regulator after an examination of a firm. (more…)