The sign at the entrance to the Facebook main campus in Menlo Park, Calif.
The sign at the entrance to the Facebook main campus in Menlo Park, Calif. - 
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David Brancaccio: What did the big bank behind Facebook's stock know, when did it know, and who did it tell? Morgan Stanley and Facebook are on the hot seat as lawyers representing investors prepare to sue over how the public offering of stock was handled.

Marketplace's New York bureau chief Heidi Moore joins us live in the studio. Hello Heidi.

Heidi Moore: Hi David.

Brancaccio: What is all this about?

Moore: Well Facebook apparently tipped off its banks that it would miss its earnings estimates and those banks tipped off some sophisticated investors, but they didn't tell everybody else. Everybody else had to make due with a vague blurb in an official filing that Facebook was having trouble making money on its mobile business. So it's kind of the '1 percent' and the '99 percent', the top of the foodchain knew something was wrong and everyone else did not.

Brancaccio: Now if this proves to be true, that doesn't seem fair. That some investors got access to what could be some very crucial information.

Moore: Right, it would explain the selling of Facebook stock for three days, that downward pressure -- twenty percent down. It's also kind of ironic. You know Facebook couldn't figure out the privacy settings for investors; they didn't know who needed to know what. It's really not playing ball, it's in a gray area of security's laws, but Facebook shouldn't have done it. It's just bad news.

Brancaccio: But if this new information became available to facebook after the official deadline Facebook was up against for filing with the government, maybe they didn't have to tell the world.

Moore: Well it's a gray area. In spirit, you want to go out -- if you are the people's IPO, if you are Facebook with 900 million users -- don't you want to treat people fairly. Isn't that part of the spirit of it. So even if they get out of the technical legal issues, that says something about how the company treats its investors. That's what it is going to have to watch out for.

Brancaccio: Briefly now, no one ever advertised the launch of Facebook stock as a sure bet for short-term investors. Some people feel they got burned, but now they are complaining?

Moore: Yeah, tough luck. Really if you bought into Facebook stock, you probably were waiting to make a ton of money really quickly. If that didn't happen for you, nobody feels bad for you.

Brancaccio: Marketplace's New York bureau chief Heidi Moore, thank you very much.

Moore: Thank you.


Follow Heidi N. Moore at @moorehn