Gorman stands by Facebook's IPO

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NEW YORK, May 30 (UPI) -- Morgan Stanley Chairman and Chief Executive Officer James Gorman said the U.S. bank followed the rules during Facebook's initial public stock offering.

Gorman said in a webcast message to Morgan Stanley employees "speculation of nefarious activity" concerning Facebook's debut as a public company was not true, The Wall Street Journal reported Wednesday.

Gorman also said Morgan Stanley operated "100 percent within the rules" and that he was not "aware of any dissent" among other firms that underwrote Facebook's IPO.

He also said the sharp decline in Facebook's share value since May 18 was "disappointing."

Dealogic, which monitors market data, said Facebook's fall from a $38 per share opening price to $28.84 Tuesday, a 24 percent drop, was among the most precipitous in history for a large company.

The company was valued at $104 billion after its first day of trading and has since tumbled to a company worth $79 billion. Chief Executive Officer Mark Zuckerberg's share of the company has fallen from $19.1 billion to about $14.5 billion, the Journal said.

During its IPO, trading Facebook shares was delayed for 30 minutes, and after that traders had difficulty confirming transactions.

"It's pretty stunning to watch. I haven't seen a turnaround in sentiment this severe in 15 years, and certainly not for an IPO," said Keith Bliss, a New York Stock Exchange floor trader and senior vice president at Cuttone & Co.

The social network's debut was one of the largest in U.S. corporate history, but Facebook set a record with its options trading, which opened Tuesday with 365,000 contracts changing hands, Trade Alert reported.

The bets were largely bearish, with many investors forecasting Facebook shares would drop to $25 per share by mid-July, the newspaper said.