Stock Market Today: This Bank Stock Faces More Backlash

The Greek elections did not generate any significant movement in the stock market today, which is especially bad news for one particular bank stock that's taking a lot of heat from investors.

Greece decided not to leave the euro Sunday as the pro-bailout New Democracy party narrowly won elections tallying just over 30% of the vote. Investors had feared a win by an anti-austerity movement could lead to a breakup of the euro and possibly the European Union.

That's all good news except stock markets opened lower Monday following the announcement.

Maybe investors really wanted the worst to happen concerning Greece, insuring more action by the Federal Reserve when they meet later this week. QE3 is still a possibility but it seems that some are disappointed by the Greek elections, which could just be a postponement to Greece's eventual "Grexit" from the euro.

European markets rallied following the election results, but by the time U.S. markets opened investor sentiment had become neutral. It seems that until the Fed's meeting concludes on Wednesday investors will be stuck waiting for more news out of Europe to guide them.

One sector that has been vilified recently is financial stocks, and today's headliner is Morgan Stanley (NYSE: MS).

The Wall Street Journal this morning highlighted Morgan Stanley for its leading role in Facebook's IPO debacle.

Stock Market Today: Morgan Stanley (NYSE: MS) Under Fire

When Morgan Stanley and its lead banker Michael Grimes declared to Facebook (Nasdaq: FB) that they would be the "single driver" in the company's IPO they didn't expect what was to follow.

Yes, there was hype and lots of attention leading up the IPO, but now it seems there is nothing but backlash.

Morgan Stanley and specifically Grimes must deal once again with being in the spotlight for this botched IPO. The recent Journal report indicated Morgan Stanley made many moves that were inconsistent to past IPOs handled by the company and others.

Morgan Stanley conducted many meetings with prospective institutional buyers without the other two lead banks, JPMorgan Chase & Co. (NYSE: JPM) and Goldman Sachs Group Inc. (NYSE: GS). This led to the other lead banks having to gauge the level of demand for shares from a much smaller sample than what Morgan Stanley had, and maybe led to Goldman and JPMorgan deferring to Morgan Stanley on some key issues of the IPO.

Morgan Stanley, along with Facebook, supported increasing the number of shares and the price range despite protests by a Goldman executive. MS also allocated 26% of the initial shares to individual investors who usually only receive up to 15% of the IPO shares.

Just 3.4% of all U.S.-listed IPO deals since 1995 have increased both the number of shares and the price range of their IPOs before pricing, according to Dealogic, a provider of global investment banking analysis.

Morgan Stanley insists it did its job, citing the fact that the stock traded above its $38 offering price as proof that it was priced well.

Since its second day of trading, however, the stock has failed to rise above that level. Instead Facebook stock is down 20% since the IPO, the steepest-ever decline over the first month for an IPO of $1 billion or more of a U.S.-based company, according to Dealogic.

Morgan Stanley probably doesn't mind too much as they still made out pretty well. The underwriter will collect $68 million in fees - 38.5% of the $176 million that's to be given out to the 30 underwriters. JPMorgan will get about 20%, and Goldman, 15%.

This was another unusual part of the IPO, as normally the top banks split the fee structure equally. Facebook is the only U.S.-listed IPO that topped $5 billion since 1995 to have a fee structure not split equally at the top, according to Dealogic.

Taking into account the profits Morgan Stanley made on Facebook's first day of trading, which are reported to be $125 million, there remain plenty of reasons to be mad at the investment bank if you were a Facebook stock holder on day one.

Morgan Stanley was down more than 3% as of 3 p.m. today to $13.85. The S&P 500 today was up 0.23% an hour before market close.

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