Washington, May 25 (ANI): Even as Facebook continued to face heat over whether they gave unfair advantage to preferred clients, IPO analysts have said rules need to be changed to allow investors a more even playing field to sell their shares.
A week after the company had the biggest tech IPO in U.S. history, Facebook stock closed up 3.2 percent to 33.03 dollars on the NASDAQ Thursday, causing average investors to lose thousands of dollars while betting on the firm's IPO.
According to reports, Capital Research and Management, an investment firm based in Los Angeles, was one of the preferred investors that had received a warning from an underwriter about Facebook's lower-than-expected revenue days before the IPO.
"We, like other investment management firms, had access to publicly available information, and we made an investment decision based on publicly available information," Chuck Freadhoff, a spokesman for Capital Research and Management, told ABC News.
James Krapfel, an IPO analyst with the firm Morningstar, said that while procedures followed by Facebook may at first sound "legal and common", rules needed to be changed to allow potential investors an even playing field.
The Facebook IPO bungle has led to three investors to file a class action lawsuit before a Manhattan federal court on Wednesday against the Facebook's board and its underwriters, saying its filings with the Securities and Exchange Commission were "false and misleading." (ANI)