>In essence, the lawsuit revolves around MS and GS passing bad news round internally without publicly broadcasting it publicly - a form of insider trading.
This is silly. The bad news for Facebook was public, before the IPO. "Did not do the research" is not a defense.
No, that's wrong. The banks weren't passing those two links around, nor the facts they were based on. They were passing their own analysis, privately, to a select set of customers.
Whether that constitutes "insider trading" depends on whether or not that analysis was done based on or augmented by internal information related to their underwriting of the IPO. That's a question we can't answer, thus the lawsuit.
Further, I don't even think it would have been legal for the analyst to publish their findings - if I'm not mistaken, MS and GS need to wait until IPO + 40 days before publishing anything about FB besides the IPO prospectus.
This is silly. The bad news for Facebook was public, before the IPO. "Did not do the research" is not a defense.
http://bits.blogs.nytimes.com/2012/05/09/facebook-amends-its...
http://www.cnbc.com/id/47147457
I think that the suit against NASDAQ has some merit, especially considering all the stories about traders getting the incorrect number of shares.