Unless the "deal" he is talking about is that of retaining the banks for $100m, which is an entirely different deal altogether, namely that of money exchanging hands for buying the services of the banks.
Morgan Stanley's reputation as lead underwriter may suffer from the stock market debut of Facebook Inc., whose initial public offering left investors in the largest social network disappointed.
The bank stepped in to prop up the stock from dipping below its $38 IPO price yesterday, said people with knowledge of the matter, who asked not to be identified because the purchases were private. Morgan Stanley, based in New York, was the only underwriter among Facebook’s 33 banks with the responsibility to support the shares, the people said.
Underwriters “are acting like the cavalry to keep this thing going up,” Eric Jackson, founder of Ironfire Capital LLC, said in an interview on Bloomberg Television’s “Street Smart.” “They’re not going to be here a week from now, two weeks from now, a few months from now. It does suggest that there are going to be some rocky waters ahead.”
How Goldman Sachs Blew The Facebook IPO
[W]hen it came time for the IPO, Ebersman departed radically from Wall Street tradition.
Instead of asking Wall Street for advice on what to do, Ebersman told Wall Street what he wanted.
First, he drafted a complete IPO prospectus himself, with no help from Wall Street.
Then, instead of holding a “bake-off” like LinkedIn, he decided on his own which banks he wanted on the underwriting team, what roles they would play, and how much Facebook would pay them. Once he had made his decisions, he took them to Zuckerberg and Sandberg, who approved them.
And then, in February, a few days before Facebook filed its IPO prospectus with the SEC, Ebersman called the banks, told them what the deal was and what role he was offering them, and asked whether they wanted in.
Not surprisingly, they wanted in
"The system consists of skimming off everyone's pensions and savings: the banks make money taking a cut between the fund manager at, say, a pension fund, and the vendor (company issuing the shares) … The fund manager makes his money by charging a fee to the pension funds – ordinary people. You get corporations keeping an eye on the chocolate biscuit bill, then paying out huge fees to banks. If they saw how easy most of our work was, they would weep. Why do they put up with the fees? They have no choice, essentially. It's a cartel. And they'd rather pay up than go into business with somebody no one's heard of.
In particular, the suit claims that Facebook executives told the underwriter banks to lower their revenue projections for the company, and that the banks relayed this information to favored clients but not to the general public.
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