TAKING STOCK: Grr, Facebook

Dear Mr. Berko: I bought 500 shares of Facebook the day it came out and paid $44.25 a share because I didn't have the contacts to buy it at the $38 offering price. Now the stock is $21, and I have a $12,000 loss, which is criminal. I blame the underwriters who held a huge short position of 80 million shares and refused to support the stock as it collapsed. I blame the Securities and Exchange Commission for approving the stock and allowing pre-IPO owners and Facebook employees to sell the stock a month after the initial public offering, which further sank the share price. I blame CEO Mark Zuckerberg for promoting Facebook and allowing the sale of 421 million shares at $38. He should have known that 421 million shares exceeded demand, but his greed wanted to raise enough money for him to be an instant multibillionaire like Bill Gates and Warren Buffett. So I want to sue Morgan Stanley for improperly managing the deal, for making $200 million on the IPO and for aiding and abetting this fraud. And I want to sue Zuckerberg for poorly managing Facebook's business, which shafted the public, and also the SEC for allowing this fraud to happen. I've contacted two lawyers, but neither would take the case. Could you recommend a lawyer who would take my case? RA, Des Moines, Iowa Dear RA: It's a fact that Morgan Stanley and its IPO partners did what Zuckerberg hired them to do. For $200 million in fees, these people persuaded thousands of breathless investors to buy Facebook (FB-$21). Certainly, Zuckerberg is responsible for your losses because you never would have bought FB if "Z" hadn't taken it public. While all of the good, bad and ugly was disclosed in the prospectus, "Z," Morgan and the SEC purposefully failed to highlight the negatives with bold print. In fact, two weeks prior to the IPO, General Motors announced it was pulling its advertising, and once again, "Z," Morgan and the SEC refused to raise warning flags or delay the offering. Meanwhile, the sale of FB shares by hundreds of pre-IPO investors and FB employees soon after the offering (a possibility discussed in the prospectus) should not have been allowed when FB shares began to tank. Were I you, I definitely would feel cheated and vengeful, and I'd sue everybody connected with the IPO. You have the perfect right to do this. It's evident to you that the media, the underwriters and the brokers malevolently promoted the shares to convince a goofy public that FB would explode from $38 to $100. Of course you must sue Zuckerberg for failing to tell the public that FB might not zoom to $100 a share. And you also must sue the SEC because it stood idly by as FB crashed to $18; it obviously should have delayed the offering. I've received two other letters from stupids like you blaming everything but their own stupidity and cupidity. I hope you don't have a wife or children! Meanwhile, I won't recommend a lawyer friend in Des Moines. I like him too much to allow a puerile, immature crybaby like you to pollute his office. Frankly, I think he'd call the nuthouse cops after two minutes of listening to your rank rant. FB came public Friday, May 18. Even a quarter-wit won't buy new issues on a Friday, because unexpected news over a weekend can be ruinous. Even a half-wit knows that when the price of a new issue fails to rise on the same day or following days, it's wise to cut your losses immediately or sooner. And even a fully accredited nitwit would sell FB to protect his principal as the stock began to crash. Certainly, you had plenty of time to sell FB for more than $30 a share rather than wait till it fell below $20. So the first question any lawyer would ask is, "Why didn't you sell FB on any of the days of the following week and limit your losses?" And your answer is...? ---------- Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. Visit Creators Syndicate website at www.creators.com. © 2012 Creators Syndicate Inc. Published: Mon, Oct 1, 2012