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Morgan Stanley (NYSE:MS), CEO and Chairman, James Gorman has defended the underwriting process of Facebook Inc (NASDAQ:FB) IPO. He claimed that the Securities firm worked 100% within rules during the process expressing his disappointment of the company’s bearish performance at NASDAQ Stock Market. Gorman was speaking during a weekly strategy meeting held Tuesday, whose recorded version was later webcast to the company’s internal employees.

Several publications have suggested that there was a significant dissent during the underwriting process after the company’s offer price was increased on three occasions to settle at $38 per share.

The volume of shares to be sold at the initial public offering was also increased from 388 million to 484 million, whereas the projected revenue was revised downwards by approximately 18%. Shockingly, Mr. Gorman denied having experienced any dissent during the underwriting process.

A close examination of the trading activity indicates that the only a certain class of investors, rumored to be well known to the Underwriter got the information of the change in revenue prospects, thereby making them one of the beneficiaries. The other beneficiary is of course the issuing company, in this case, Facebook Inc (NASDAQ:FB), after collecting the proceeds from the IPO at a premium.

In this case, one would suggest that Morgan Stanley acted ethically by giving value to its customers, namely: Facebook Inc (NASDAQ:FB) and its portfolio of clients. Such is the suggestion as quoted in London’s online news magazine, The Telegraph. However, in my opinion, ethics applies across the board.

Actually, the act would be unethical in the sense that Morgan Stanley (NYSE:MS) gave preference to a select few, who happen to hold much wealth. This indicates a scenario whereby self-interest once again took center stage in place of the common good.

In addition to this, Gorman’s claim the company was 100% in compliance to the available rules and regulations indicates that it was not a question of ethics, but adherence to rules and regulation. Moreover, just how often have you heard of companies looking for a tax expert to avoid (NOT evade) tax? So, who says there are no experts who can play around with the financial markets rules and regulations to come up with a strategy to milk you out to your last penny?

‘Caveat Emptor’, corporate Social Responsibility still lags behind the goal of maximizing shareholder wealth! Morgan Stanley probably “agrees with me” hence the company’s preference to higher income.