Report: Facebook Fiasco May Deepen Investors’ Distrust of Stocks

May 25th, 2012 at 6:28 pm

Facebook‘s performance in the stock market remains dismal at most as its IPO continues to be plagued by trading error and a 16 percent drop in the share price as of this writing. And with a recent accusation that institutional investors, trading insiders, and favored clients were given vital information before the regular investors could hear about it, FB might just discouraged many individual investors from investing in the stock market.

“The perception is Wall Street jiggered this IPO so the underwriters made money, Facebook executives made money and the small investor got left holding the bag,” said Andrew Stoltmann, a Chicago-based attorney who represents Facebook’s retail investors.

Federal securities regulators and the United States Senate banking committee have stated they will or may review Facebook’s IPO. This comes after buyers of stock filed a class suit against Facebook, the sale’s underwriters, and NASDAQ–which was beset with order cancellations and delays in trade confirmations on FB’s first day of trading.

Source: Bloomberg

Photo credits: Frank May/ DPA/ Landov