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Excerpt: "Every week now we see stories like this that hint at a kind of two-tiered market system - in which most of the real action takes place inside an unregulated black-box network of connected insiders who don't disclose their relationships or their interests, while everyone else, i.e. the regular suckers, live in the more tightly-policed world of prospectuses and quarterly reporting and so on."

Matt Taibbi at Skylight Studio in New York, 10/27/10. (photo: Neilson Barnard/Getty Images)
Matt Taibbi at Skylight Studio in New York, 10/27/10. (photo: Neilson Barnard/Getty Images)



The Facebook IPO Clusterf**k

By Matt Taibbi, Rolling Stone

24 May 12

 

suit has been filed by Facebook shareholders against Mark Zuckerberg, Facebook, Morgan Stanley and others. It's based on a very simple concept: when internal analysts learned that Facebook’s numbers were going to be worse than expected, the company and its bankers didn’t tell everyone, but just "selectively disclosed" information to a small group of "preferred investors."

Henry Blodget, who unfortunately should know about these things, gave a good summary of it all on CBS This Morning:

I was on the phone last night with a former hedge fund CEO who was talking about this. "Facebook," he said, "is a colossal example of a complete clusterfuck where everybody wins except the ordinary investor."

His point was that virtually every week now we see stories like this that hint at a kind of two-tiered market system – in which most of the real action takes place inside an unregulated black-box network of connected insiders who don’t disclose their relationships or their interests, while everyone else, i.e. the regular suckers, live in the more tightly-policed world of prospectuses and quarterly reporting and so on.

All of these stories suggest that Wall Street is increasingly turning into a giant favor-and-front-running factory, where the big banks and broker-dealers that channel vast streams of crucial non-public information (about the markets generally and their clients specifically) are also trading for their own accounts, and sharing information with a select group of "preferred investors," who in turn help the TBTF banks move markets in this or that desired direction by jumping on or off various pigpiles at the right times.

Sooner or later, people are going to clue into the fact that one or two big banks, acting in concert with a choice assortment of unscrupulous "preferred investors," can at least temporarily prop up or topple just about anything they want, from Greece to Bear Stearns to Lehman Brothers. And if you can move markets and bet on them at the same time, it's impossible to not make tons of money, which incidentally is made at everyone else's expense. So we should always be on the lookout for any evidence that that sort of coordinated, non-disclosed activity is taking place.

This Facebook thing is a perfect example. It’s like that scene in Brain Candy where the evil pharma CEO Don Roritor takes his star scientist, Chris, on a walk in the middle of a party at his house: after they walk around Don’s rocking indoor pool, they open a set of doors and there’s a completely different party going on there.

"What’s this?" Chris asks. "Oh, this is the real party," says Roritor.

e-max.it: your social media marketing partner
 

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+91 # Robert B 2012-05-24 09:38
Why has Eric Holder done absolutely nothing about this kind of thing for the past three years? Sometimes I wonder if he has a pulse.
 
 
+41 # Granny Weatherwax 2012-05-24 10:29
He does have a pulse - he also has campaigns to finance, wealthy friends and is probably not an indigent himself.
 
 
+46 # Adoregon 2012-05-24 11:39
Robert,
Welcome to the United States of Fraud.
The 1% fully embrace W.C. Fields' dictum, "Never give a sucker an even break."
 
 
+2 # John Locke 2012-05-24 12:10
The real probllem is who is on the Banks Payroll, Obama is one that we know is, its easy to tell, what has he done to stop Bank Fraud, Nothing, he has given them a free ride to do what ever they want, then he meets with Jamie "Demon" for his hand out!
 
 
+15 # John Locke 2012-05-24 12:08
Its called a failure of real leadership. if we had an honest administration this would end up with many insiders sitting in jail, but when the President allows this type of corruption to go unchallenged, it is a gift that will happen over and over...The problem is who is on the banks payroll...Need I say more?
 
 
+27 # paulrevere 2012-05-24 13:22
JL, you have this knee-jerk irrationality I'd like to point out. You blame political figures, usually from the left, for just about all things failed in the US.

One question, have you paid attention to your local political realm? Developers and most Chamber members, aka, THE MONEY, arm twist every possible law meant to restrain their greed.

Consider how many times growth/building permit limits are 're-adjusted'.. .UP...or in the past decade how often these cretins have used eminent domain to steal individual property a la bushco and the baseball stadium.

Sorry buddy, but you, in your libertarian fervor too frequently miss the mark of motivator and motivation.
 
 
+3 # RLF 2012-05-25 04:57
Holder is just like Obama...wanna be good ole boys....Oh! wait! They are...they just happen to be a different color...no different attitude.
 
 
+6 # restore2america 2012-05-25 06:01
Because Eric Holder is a crook who works for the crooks. Why would we expect him to do anything to protect the 99%?
 
 
+4 # racetoinfinity 2012-05-26 20:33
He has a pulse, all right; it beats to the drum of Wall St. and what they want and don't want.
 
 
+3 # Third_stone 2012-05-27 23:00
This is what deregulation is about. It appears that much of what they have done is not illegal. It may have been once, but we have been working on deregulation since Reagan, and now we have the result.
 
 
+26 # cordleycoit 2012-05-24 10:07
We do love these tales of pathos from the world of banking. The problem seems to be endless only because people are trusting MSM for their enlightenment, that rates with going to the House of Morgan for financial advise. They are all crooks folks. This stuff is called bendover banking.
 
 
+20 # John Locke 2012-05-24 12:11
cordleycoit: The question is when will people have enough and stand upright?
 
 
+41 # stonecutter 2012-05-24 10:10
I just watched the Blodget interview on CBS. The whole thing makes even this old cynic sick, from top to bottom. There is absolutely no way an ordinary small-investor "outsider" can trust ANYTHING in the retail markets anymore. A retail broker at any house has the same credibility as Andrew Breitbart...had . The whole thing is rigged for the big-money insiders, whether they be institutions or rich individuals. Al Capone would be bedazzled by it all. By comparison, it makes playing slots in an Indian casino a sure thing.

The media reports this stuff in such an oily, "corporate", typically opaque manner--Blodget sits with a frozen smile in between his tepid, boilerplate responses to Charlie Rose's boilerplate questions--that zero insight into what is actually going on results from this "expert" 2-minute interview. The anchors and field "reporters" know as much about the actual mechanics of these deals as kids in a sandbox. They ask simple-minded, scripted questions while the putative "players" spin the secretive mess into a bonafide enigma. Shelby, a certified Wall Street stooge, stands there with a straight face (actually crooked) and says (with a subtle but uncontrollable smirk) he'll "do my duty to represent the taxpayers who sent me to Washington". Swampland in NJ?! He's from Alabama, right? A nest of stock trading geniuses if ever there was one. 85% of the Banking Committee is in Wall Street's pocket. FB and MS win this year's Madoff Prize.
 
 
+44 # Senior Citizen 2012-05-24 10:19
George Carlin has already explained why this crap continues!

See this clip: "The American Dream/The Game is Rigged"

at: http://www.youtube.com/v/acLW1vFO-2Q
 
 
+1 # ginaD 2012-05-26 19:11
Quoting Senior Citizen:
George Carlin has already explained why this crap continues!

See this clip: "The American Dream/The Game is Rigged"

at: http://www.youtube.com/v/acLW1vFO-2Q



Go read THE LORDS OF TIME ON THE ASIATIMES SITE. YOU WILL UNDERSTAND HOW YOU CANNOT WIN IN THE STOCK MARKET.
 
 
+25 # katbyrd63 2012-05-24 10:25
what do you expect, they're "legalized"
gangsters
 
 
+36 # CoyoteMan50 2012-05-24 10:34
Ok I called the FB/Morgan Stanley situation a clusterf*ck last Friday (5/18) when I predicted Wall St would play with the numbers and take most of the money.
Most people hesitated to agree with me. Some said I was crazy.
Now we have Matt Taibbi weighing and he calls it a clusterf*ck.
What else can it be when Greedy Wall Street types are in control.
The big boys make a lot and as usual your 401K is dead in the water.
lol
 
 
+18 # Vern Radul 2012-05-24 10:47
Wall Street + Washington, D.C. = P.T. Barnum, Inc.

The new tagline/motto is "LOL. We Saw You Coming!"
 
 
+1 # Vern Radul 2012-05-24 13:05
And as part of the rebranding the new logo for online trading is...

http://tinyurl.com/849uqw9
 
 
+5 # Kiwi123 2012-05-24 10:56
This is what we find
This is what we find
This is what we find
This is what we find
The hope that springs eternal, springs right up your behind!
This is what we find(repeat to fade)

Ian Dury & the Blockheads
 
 
+20 # socrates2 2012-05-24 10:56
Sounds like Wall Street has been exposed as an analogue of mainstream media. Real news for voters to determine policy and their political future seldom gets reported on the MSM in headlines or on the 6 o'clock news; all that the majority gets tends to be the police gazette-like pieces, celebrity gossip and feel-good, planted political messages for public consumption.
 
 
+27 # countmarc 2012-05-24 11:08
Hearst started the Spanish American war from his office, the "Big Four" made a master land grab when they built the Railroad, Millions died in WW1 so ships could send shit to both sides, Chaney made several fortunes for himself and his coven by "privatizing" war, which is just a updated replay of the mercenaries from the beginning of time to the French foreign legion. A line of bull went on and on about global competition to get the Free Trade & outsourcing that eventually took a chunk of the jobs in manufacturing & retail. Now new meat is found in the person of Zucker, floating billions of ducats under the greedy noses of vultures. If the time honored practice of binge and purge did not occur, now that would be news. BTW there IS a law, rule 10b(5).
 
 
+10 # Bodiotoo 2012-05-24 12:57
Maybe this is the case that will finally get some prosecution...a fter all MZ is just a smark alec drop out! The perfect pigeon for the government and MZ has some seriously angry Harvard Money that would just love to get him.
Watching the pre-sale pricing going on the little investor should have seen the drop coming. Totally worked by the insiders...lets send some folks to prison, these crimes are a whole lot worst than the folks we have locked up for possessing a joint.
 
 
+6 # MoonBeamWatcher 2012-05-25 09:59
"Totally worked by the insiders...lets send some folks to prison, these crimes are a whole lot worse than the folks we have locked up for possessing a joint!"
ONCE UPON A TIME, the world invested in Wall St. BECAUSE we/they had 'Full Faith and Confidence' in the STREET and all the financial reports. NO MORE and we and the WORLD are paying the price!
 
 
+15 # fredboy 2012-05-24 13:15
Long predicted this IPO would flatten--Facebo ok is a brilliant concept but I fail to see a vibrant income stream. And yes, it reflected the insider and outsider dimensions of a very, very, very twisted market.
 
 
+14 # Patrice Ayme 2012-05-24 13:38
When the banks are corrupt, everything follows. Banks ought actually to be viewed as public enterprises.
See:
http://patriceayme.wordpress.com/2012/05/21/banking-demons/
 
 
+5 # RLF 2012-05-25 04:55
When the rich feel like they have a license to steal...everyon e follows suit.
 
 
-4 # MoonBeamWatcher 2012-05-24 19:59
It's based on a very simple political concept: when internal analysts learned that numbers were going to be worse than expected, the admistration and its backers didn’t tell everyone, but just "selectively disclosed" information to a small group of "campaing contributiors."
 
 
+8 # Texas Aggie 2012-05-25 04:57
You may not have noticed, but it wasn't the administration that was involved with this. It was Wall St. They are the ones who sold the IPO, not Washington.

Your comment is based on the same mindset that still has a large minority of people convinced that Saddam Hussein was involved in 9/11.

"If I hate the guy, then he is responsible for everything bad, despite all evidence to the contrary."
 
 
-4 # MoonBeamWatcher 2012-05-25 10:07
BULL FLAP, Holder is a puppet and he proved that the US Congress is more like a handkerchief in the pocket, just for show, NOT FOR BLOW! SOB lied like a rug to them and THEY retried Roger Clemens, what a gang of SMUCKS!
Who fears the DOGS WITHOUT (BALLS) TEETH?
 
 
+7 # Senior Citizen 2012-05-25 13:56
Texas Aggie is 100% correct! Fm today's WPost column by Harold Meyerson titled 'Dysfunctional capitalism' (w/MY EMPHASIS IN CAPS):

"Another day, another display of the dysfunctions of American capitalism. On Wed, some understandably disgruntled investors filed suit in federal court against Facebook & SEVERAL OF THE BIG BANKS THAT PROMOTED ITS STOCK SALE. The lawsuit alleges that the social media giant & THE BIG BANKS "selectively disclosed"" to "certain PREFERRED investors" the fact that Facebook's financial prospects weren't as bright as the PUBLIC had been led to believe."

"In the days leading up to the company's IPO last week, the WALL ST. JOURNAL has reported, THE UNDERWRITING BANKS TOLD MAJOR INSTITUTIONAL investors that FB's share price would be set way too high...
NO ONE conveyed this info to INDIVIDUAL investors..."

"SUCH 'SELECTIVE DISCLOSURE' may be grotesquely unfair, BUT IT'S PERFECTLY LEGAL. THE LAW (created by Congress, folks!) requires CORPORATIONS & BROKERS to inform the public of any info that could affect the value of their stocks--EXCEPT IN THE CASE OF IPOs, WHEN SECURITIES FIRMS ARE FORBIDDEN fm reporting such info TO THE PUBLIC UNTIL 40 DAYS AFTER the initial offering."

"This isn't a widely known LAW; the Journal called it "one of WALL STREET'S BEST KEPT SECRETS."
 
 
+3 # Mrcead 2012-05-26 17:31
That was a very distressing and chillingly sobering read. I hope others will take note and finally let this sink in. Cut out the cancer that is Wall Street.
 
 
+5 # Howard T. Lewis III 2012-05-24 21:33
E. 'The Holder' Holder is the guy left holding the bag for Bush41's Operation 40 guns for drugs and murder program going on as far back as 1952 and before.The next generation Bush cabal will be continuing to use puppets within the U.S. government for proxies for Skull and Bones ambition. The numerous serious attacks ongoing since 9-11-2001 have been destroying Europe's and in particular, The City of London's economic competition. 'Bayonet to the ribs' psychosis like they did with Lady Diana Spencer after she had two heirs to the throne for Chaalllz.
E.Holder is a placebo AG without scruples or notable accomplishments .
 
 
+6 # RLF 2012-05-25 04:54
I heard a 'regular person' on the radio yesterday complaining that she couldn't get her Facebook confirmation and flip the stock to make money...without doing anything or investing to develop a business or any of the reasons Wall st. was invented to start. It has become a microsecond casino and needs a trade tax to stop the gambling or at least pay for the damage. It used to be that you could start a business by getting a loan from the bank but now they only gamble with this Facebook kind of shit making business capital increasingly expensive...jus t another way for the 1% to take money away from the rest...thanks Bill Clinton for getting rid of Glass/Steagal!
 
 
+4 # JSRaleigh 2012-05-25 13:28
Tried to watch the Blodget interview, but apparently CBS won't allow me to see it unless I remove all SPAM & MALWARE blocking software.

Bottom line, the Wall Street insiders have again ganged up on the rest of us to beat us up and steal our lunch money.

Wall Street FRAUD is a tautology.
 
 
+4 # coachwrite 2012-05-25 18:12
This is NOTHING NEW! "Insider" trading has been a fact of life on Wall Street since before it was paved. There are offerings for the 1%, then the crumbs are distributed among the rest of us.
Invest in yourself, you'll earn more value.
 
 
+2 # William Bjornson 2012-05-26 12:25
Anyone care to PUBLICLY guess what the most element of commonality is among this coterie of 'ins'? I dare you!
 
 
+2 # Senior Citizen 2012-05-29 11:31
Quoting William Bjornson:
Anyone care to PUBLICLY guess what the most element of commonality is among this coterie of 'ins'? I dare you!


To USMC:
You asked for a "guess".

I can't narrow it down to 'just one' but closely related to 'HUBRIS' = "exaggerated pride & self-confidence " per my dictionary are:

- a sense of self-importance/superiority
- a sense of entitlement
- actually being 'born rich' & not really having to 'work' at anything
- greed
- a lack of compassion & feeling for anyone 'not like me'

vr/LCDR, USN-Retired
 
 
+3 # Buddha 2012-05-29 15:15
This is why this last "market advance" from last fall was on very thin volume, with almost no "retail" investors involved, who just keep going into bonds and money markets. When the fear of being "run over by the bus" is larger than the fear of "missing the bus", that takes a LOT of money out of the casino, and it just becomes a cannibal shop of horrors, where institutional investors battle each other with our checking and savings deposits riding on the success or failure of their leveraged bets. People are waking up to the reality that Wall St. is a casino stacked against them.
 
 
+1 # Senior Citizen 2012-05-29 17:44
Pls excuse the 'repeat post'. Unfortunately, not enough people have woken up to the reality that the "game is rigged" and the vast majority of us don't have a chance of success.

George Carlin has already explained why this crap continues!

See this clip: "The American Dream/The Game is Rigged"

http://www.youtube.com/v/acLW1vFO-2Q
 

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