Facebook's IPO: Lawsuits, Billions Lost, and Wall Street Wins

There is something attractive about a criminal trial. Most of our beloved shows involve violent crimes and the aftermath of police and prosecutors trying to seek justice. Maybe too many. I lost count with how many CSI shows there are.

We are enamored with the whole process and the high stakes involved. A person's liberty is at stake versus the justice rightfully needed for the victim's family. It is fundamental to our core that we see to it that criminals are punished and that's why it catches our attention.

For me though, a botched initial public offering of a tech company and the legal aftermaths captures my interest. I'm just fascinated with the idea that an attorney can wave around a disclosure form and some documentary evidence representing the current trading price of a Facebook share and win an argument. And there are many people who are trying to do just that.

In May, the news coverage was heavy on the genius of Mark Zuckerburg and the meteoric rise of the social networking site. Look in the Wall Street Journal today and there are articles about dozens of lawsuits pending against Facebook and the underwriter, Morgan Stanley.The bases for their claims is  that the required disclosures given to investors prior to the public offering were insufficient and the analysts failed to provide realistic revenue projections.

The plaintiffs, investors who lost a substantial sum of money from the IPO, argue that there should have been more information given as to  Facebook's problems with advertisement, revenue, and trend that users are accessing Facebook with their mobile devices.

In other words, the investors feel duped into buying a stock that was overvalued. It sounds ridiculous, right? They should have been more careful. Haven't they heard of "buyer beware?"

Wall Street is never simple and that has been proven with the third largest IPO in our history. There seems to be a lot of news coming forward that despite investors losing money and Facebook losing respect in the mind of investors, Wall Street ended up with more money than usual. That shouldn't sound ridiculous, they always win.

The banks used an underwriting provision called a stabilization clause, or a Greenshoe option, to minimize their risk. It paid off. While Zuckerburg lost billions, Morgan Stanley was handing out the pool of about $100 million.

Not only did banks profit from their underwriting services, they profited from taking short positions on the Facebook stock. Traders at Goldman Sachs and JP Morgan took positions that the shares would decline in value. These complicated and controversial trades almost always benefit the banks despite the damage done to the issuing company.

When its all said and done, we have laws in place which enable investment banks to engage in this business. We can put some blame on Facebook for overvaluing itself or the underwriters for failing to disclose all material information. At this point, it may not matter. The average investor lost money, Facebook lost money, and the banks made money. Like I said, it is totally legal but its like they are getting away with a crime. The banks are the ones robbing the investors.

It may be best to just watch CSI. In those shows, there is always justice at the end.

Mayweather Knocked Out in Court!

Floyd Mayweather Jr. is one of the most successful boxers of all time. He has a perfect record of 43-0. No losses, and all wins. It's too bad for him that it does not carry over into the court. He's losing all those fights.

A couple of days ago, Mayweather was forced to pay his nemesis, Manny Pacquiao, over $113,000 in legal fees and costs. Pacquiao's attorneys made the legal jab when Mayweather failed to show up to his own deposition. The court stated that it was "obviously intentional," and ordered monetary sanctions.

This case is not for a battery or an upper punch. Pacquiao sued Mayweather in federal court for defamation when Mayweather made a statement that claimed Pacquiao used performance enhancing substances. Instead of retaliating with his fists, Pacquiao retained an attorney. I would have liked to see the fight on pay-per-view.

A defamation case gives justice to those who believe that their reputation has been tarnished due to a false statement. Pacquiao has every legal right to pursue this remedy, but it seems unnecessary. Mayweather seems to be losing the fight for the public's respect. It could be because of his domestic abuse conviction or the controversial win against Victor Ortiz. But, its probably a combination of the two.

Mayweather is also losing any fans he may have had in the legal field. He is blatantly disrespecting the judiciary. The deposition of a party is a necessary part of the discovery process. It allows all of the necessary evidence to come before the court. It is within the court's power to sanction those individuals that refuse to participate and rightly so.

I do not think it will have any effect on Mayweather's finances. He makes millions for each fight he takes part in, before it is even decided who wins. One contract showed that a Mayweather-Pacquiao fight would have netted over $50 million for both. A $113,000 sanction is like chump change to the champ.

Ultimately, this dispute between the two must be decided in the boxing fans eyes highest court  - the boxing ring. We will have to wait and see whether Mayweather wins this legal fight first. It's not looking good, his 0-2 record in court  proves the law has been the Kryptonite to this undefeated boxing champ.

Vote (with an ID) or Die!

From 1776 until now, we have had men and women die for our freedom. In risking and sacrificing their lives , our citizens in uniform believed that it secured the rights of all people. Including those people without photo identification.

Unfortunately, the right to vote has been turned into a polarized issue. Just like with any issue our elected officials can argue about, it has become a party line vote. I would not be surprised if Republicans and Democrats took party positions on whether Coca-Cola or Pepsi was more American.

It did not have to be this way. Right after the Tea Party birth in 2010, newly Republican-controlled legislatures started passing voter ID laws with the hopes of preventing fraud. There was only one problem with their goals. There was no fraud occurring.

Before Pennsylvania's highest court heard arguments on the validity of the law, both parties stipulated that, "[the state] will not offer any evidence in this action that in-person voter fraud has in fact occurred in Pennsylvania and elsewhere,” nor will it "offer argument or evidence that in-person voter fraud is likely to occur in November 2012 in the absence of the Photo ID law."

With no evidence of past fraud or evidence that fraud will likely occur in the future, the Pennsylvania Republican Legislature has passed laws that could prevent thousands from voting. And there just so happens to be evidence of the law's negative effect on the poor, minority, and elderly. Even Jim Cramer, the host of Mad Money, has said it has caused a burden to his father.

Pennsylvania's counsel should have at least mentioned that there have been 13 credible cases in the past 10 years throughout the whole country. I mean its less than the amount of UFO sightings reported, but it is still a number. 

If this law is not about preventing fraud, then what is it really about? Could it be about politics? Sadly, there's recorded evidence to support that.

Mike Turzai, the Pennsylvania House Majority Leader, said so clearly while he was being recorded. In puffing his chest in a speech regarding the Pennsylvania House's accomplishments he stated, "voter ID, which is going to allow Mitt Romney to win the state of Pennsylvania, done!"

That takes some brass. The main legislator responsible for passing the voter ID law in Pennsylvania said that it will allow Mitt Romney to win, not that it will prevent in-person voter fraud.

I know that some Republicans will shrug their shoulders and dismiss it immediately. I know that for other moderate and reasonable minded Republicans it will cause a moment for concern. Winning a presidential election is not as important as the fundamental right to vote.

Many years ago, this country came to the conclusion that it is better that everyone get's an opportunity to vote. Not just a few. We decided that everyone should have a say in what direction America should take.

When the lower court in Pennsylvania relied on precedent to rule in favor of the voter ID law, it cited a 1869 case in which the court upheld a tough and similar law. That historic case said that if the law were not passed, the vote “would be to place the vicious vagrant, the wandering Arabs, the Tartar hordes of our large cities, on a level with the virtuous and good man.”

I do not think the Republicans have a monopoly on virtuous and good men. Nor do I think the Pennsylvania legislature should be the judge on what is virtuous. That should be left to Someone else. And when I head into the ballot box on November 6, I hope that I do not have to bring my birth certificate, social security card, and driver's license. As far as I'm concerned, all I need is my belief that we can move forward.