Facebook IPO: In defense of Morgan Stanley (MoneyWatch) COMMENTARY With Facebook (FB) stock trading far below the $38 initial public offering price and headlines claiming that lead underwriter Morgan Stanley (MS) mishandled the IPO, the sharks are circling, as attorneys representing investors ready multiple lawsuits. Apparently, someone must pay for the losses, and it must have been the investment bank's fault. If you're asking why, this video says Morgan Stanley should have disclosed more: Though I'm not usually a defender of Wall Street, I feel compelled to chime in this time. Morgan Stanley's job was to sell the Facebook story, while detailing all of the risks. Facebook's initial registration filing to go public was 179 pages, which I bet few read. Had they read them, however, they would have seen the following risks on page 11 of the prospectus: Users increasingly engage with competing products We fail to introduce new and improved products or if we introduce new products or services that are not favorably received We are unable to successfully balance our efforts to provide a compelling user experience with the decisions we make with respect to the frequency, prominence, and size of ads and other commercial content that we display We are unable to continue to develop products for mobile devices that users find engaging, that work with a variety of mobile operating systems and networks, and that achieve a high level of market acceptance There are changes in user sentiment about the quality or usefulness of our products or concerns related to privacy and sharing, safety, security, or other factors We are unable to manage and prioritize information to ensure users are presented with content that is interesting, useful, and relevant to them there are adverse changes in our products that are mandated by legislation, regulatory authorities, or litigation, including settlements or consent decrees Technical or other problems prevent us from delivering our products in a rapid and reliable manner or otherwise affect the user experience Morgan Stanley had an obligation to get the best price they could for their client. They met that obligation and did a very good job, with Facebook coming out better than the friends of the investment banks that had clamored to get in on one of the hottest IPOs ever. Complete coverage: Facebook IPO Zuckerberg 2; Wall Street 0 Why Facebook's IPO was a success When your 401 (k) will own Facebook Meet Facebook's millionaires and billionaires What's really going on In my opinion, there are two things going on here. A lot of people with a lot of money lost money on this offering. Combine that with America being a country of lawyers, and we've got the making of some really big lawsuits. I can tell you that the Facebook disclosure was detailed and that it went to very sophisticated investors. Contrast that with the sorry disclosure that goes out to unsophisticated consumers on annuities, private REITs, and other mind-numbingly complex investments, and Morgan Stanley looks like a saint. The difference is that those who lost money on Facebook have enough money to sue and have the political clout to get noticed.