Facebook IPO: poor earnings selectively disclosed?

Facebook IPO: did underwriters selectively disclose poor earnings information?

As Facebook officials were busy hyping the company’s $16 billion IPO, the company quietly told its underwriters Morgan Stanley, Goldman Sachs and JPMorgan to scale back 2Q earnings estimates. Facebook was concerned increased mobile usage would cut into earnings and the underwriters, who analysts covering the company, were too optimistic about second-quarter earnings prospects. But who did Morgan Stanley, Goldman Sachs and JPMorgan tell about Facebook’s warning? Top clients get information first. Of course, smaller investors and those buying shares in the open market never received this information. This selective disclosure provides investors close to the underwriters an advantage small investors don’t enjoy. In the three days since Facebook went public, the shares have lost…

Goldman Sachs sells stake in trafficking website

Goldman Sachs sells stake in Backpage trafficking website

New York Times columnist and crusader against human trafficking Nicholas Kristof discovered that Goldman Sachs used to own 16 percent of Village Voice Media, which operates prostitution site Backpage.com. Backpage.com has dominated the market for sex ads since Craigslist stopped running them. The site earns Village Voice Media $25.4 million a year. In his article, Kristof calls Backpage the “biggest forum for sex trafficking of under-age girls in the United States” and says that while many ads run in Backpage.com are for adult escorts, Backpage also “plays a major role in the trafficking of women or minors who are coerced” into prostitution. Goldman Sachs was “mortified” when Kristof began his reporting, Kristof says, and began…

Goldman Sachs banker Greg Smith slams firm in NYT

Goldman Sachs banker Greg Smith slams firm in NYT resignation letter

Greg Smith, a London-based Goldman Sachs vice president, publicly resigned from the financial firm in a scathing New York Times op-ed piece published Wednesday. In the article, Smith lashed out against Goldman’s “toxic” culture which, he feels, places profit above the best interests of clients. Smith likened the business to an elephant hunt, where bankers push investors into deals that will make the most money for the firm. Adding insult to injury, Smith claimed clients were consistently referred to as “muppets” in internal emails. Goldman CEO Lloyd Blankfein and President Garry Cohn defended the firm in an internal statement. It cited a survey in which an overwhelming majority of Goldman employees said they think the…

Did Paulson tip hedge funds on Fannie, Freddie?

Did Henry Paulson tip off hedge fund managers on Fannie and Freddie?

Did former Treasury Secretary Henry “Hank” Paulson engage in crony capitalism? A recent article charges that he revealed government plans to take over Fannie and Freddie to a room full of hedge fund managers before the move was public knowledge. WATCH: On YouTube Rewind to July 21, 2008. It was the early days of the sub-prime mortgage crisis that would become the global financial meltdown. Then-US Treasury Secretary Henry Paulson told the New York Times that the government are not planning to take over mortgage giants Fannie Mae and Freddie Mac. That very same day, according to a recent report by Bloomberg, Paulson met with a group of hedge fund managers where he said something…

Barack Obama gives Hu Jintao the red carpet treatment

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On the second day of state visit, Chinese President Hu Jintao enjoyed all the perks of a visiting dignitary. President Barack Obama and Hu met with business executives such Microsoft’s Steve Ballmer and Lloyd Blankfein from Goldman Sachs. At a joint press conference, a question about human rights in China got lost in the translation. The state dinner in the evening was a regal affair, with Jackie Chan and classical pianist Lang Lang providing amusement. Also, check out Hu Jintao’s first day in Washington.