The banksters continue to get rich while sucking the public dry. Facebook IPO investors are officially down 50% in just three months as FB closed at 19.07.-Lou
And Now Facebook’s Bankers Are Divvying Up The $100 Million They Made Shorting Facebook’s Stock
Boy it doesn’t suck to be a banker.
Every time I forget how much it doesn’t suck, I’m reminded of some other magical cash-printing tool I had forgotten about that allows Wall Street to coin money no matter what.
And this latest one is a beauty.
Remember the Facebook IPO? Yes, it was one of the biggest IPOs ever. It has also now become a colossal disaster that has vaporized half of investors’ capital in three months.
Wall Street bankers were paid extremely handsomely to sell the $16 billion of stock they sold on the Facebook IPO. Specifically, they were paid $176 million in fees.
(Investors who bought Facebook’s stock on the IPO, meanwhile, have since lost $8 billion).
But that was only the beginning.
Right now, reports Lynn Cowan of the Wall Street Journal, while Facebook investors digest the fact that the stock has now dropped to $19 from an IPO price of $38, Facebook’s bankers are divvying up another $100 million they made on the Facebook stock, this time in a much less visible fashion.
How did the bankers make this second bonanza?
By shorting Facebook’s stock.
By, in other words, selling Facebook stock they didn’t own and then cashing in when the price dropped.
Wall Street didn’t call this “shorting” the stock, of course. Because “shorting” is widely understood to be a bet that a stock will drop. And obviously bankers don’t want to be seen as “betting against the clients” they just sold IPO stock to.
Instead, the big short position that Facebook’s lead banker, Morgan Stanley, took in Facebook’s stock at the IPO price is described as engaging in “price stabilization” (details below).