SEC Investigation Into Facebook IPO 'Issues' Furthers Price Tumble

So what went so wrong with Facebook's recent debacle of an initial public offering? If you've got theories, do give the Securities Exchange Commission a buzz. They've got their own questions, Deadline reports.

It's the old Chinese curse, all over again: "May you live in interesting times." As a consequence, Facebook founder and CEO Mark Zuckerberg may be witnessing the writing of the sequel to "The Social Network." SEC chairwoman Mary Shapiro announced Tuesday that the federal market-monitoring agency is examining "issues" with last week's disappointing IPO.

Shapiro's announcement sent investors packing Tuesday, as share prices fell 8.9 percent to $31.01. That's a $6.99 stumble from Friday's offering.

Probably not coincidentally, Reuters reported today that lead Facebook underwriter Morgan Stanley revised and drastically reduced 2012 projections (including Q2)  to investors shortly before Friday's $38-per-share IPO. Consumer internet analyst Scott Devitt reportedly adjusted his prediction when Facebook filed an amended SEC prospectus May 9 based on concerns about consumers increasingly moving to utilizing the social network on mobile devices, where advertising is historically less lucrative.

When Morgan Stanley adjusted estimates downward, fellow underwriters Goldman Sachs and JPMorgan Chase followed suit.

If Morgan Stanley indeed informed institutional investors during its road show leading up to last Friday's IPO but not the general public, then the firm may have violated laws barring such selective disclosures.