Roger McNamee, the cofounder of Elevation Partners, bashed the way that Morgan Stanley and NASDAQ handled the IPO during an interview with Bloomberg, arguing that their behaviour was borderline criminal.
“[The Facebook IPO] exposed, in my mind, the extreme corruption in the capital formation process and really on Wall Street itself,” McNamee said. “NASDAQ’s behaviour on this, in my mind, borders on criminal. I think Morgan Stanley’s behaviour borders on criminal.”
McNamee added that he believes underwriters deliberately shorted the stock leading up to the public offering.
“You watch what all of these people have been doing in secondary markets. Do you think it is a coincidence that every secondary offering trades down five or six days before the offering, then they price it down 15%, and then it pops? It sure looks to me like the underwriters are shorting the stocks. What I am saying is I look at all of this and as a 30-year investor, I think people on Wall Street have just so totally lost track of honesty.”
Another reason McNamee may be steaming under the collar about Facebook’s disappointing IPO is that Elevation reportedly took a huge stake in Facebook, buying up shares on the secondary market. Three months ago, those shares probably seemed like they were worth more than they are now.
The exchange starts around the 5:30 mark in the video below: