Three investors sued Facebook and chief executive Mark Zuckerberg on Wednesday, along with lead underwriter Morgan Stanley and a host of other underwriters, accusing them of withholding negative information about the social network’s initial public offering.
On Starting Point this morning, Democratic Senator Richard Blumenthal discusses the reasoning behind these lawsuits and explains why he is calling for an investigation into the social network’s IPO by the Senate Banking Committee and Congress.
Sen. Blumenthal says that he thinks disclosure laws may need to change in order to treat verbal communication between companies and investors the same as written prospectus.
“The law needs to change so that the playing field is fair and balanced and so everybody get the same information at the same time,” Blumenthal explains.
“The law, believe it or not, is supposed to be fair,” the Senator says, ”and the little guy, the ordinary investor, the retail as opposed to the institutional investor, really deserves fairness here.”