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Farhad, I am glad you mentioned "...the only party that matters is the issuing company..." I agree you need to look at what the company netted. However, the insiders were authorized to sell more than the company was raising. Markets tend to second-guess funding insider windfalls. The insiders won that one in this case, not the company. There is almost certainly some moral hazard surrounding the hyping of the IPO valuation when it is so prejudicial.
Let's look at the issue surrounding the selective disclosure: The Volcker Rules prohibit Analysts from sharing information with the general public in situations like we just witnessed - it's meant to protect the retail investor from "over-hyping" the IPO. The Rule assumes Analyst chatter will always be positive "Marketing" etc. However, when there is negative information, the Volcker Rules similarly protect retail investors from it too. Analysts are permitted to share information with institutional investors as the assumption is they are sophisticated enough to filter the data. IMHO, it's about time regulators let investors decide for themselves and create a more transparent system.
1 year, 6 months ago on The Best Thing About Facebook’s IPO: The Tech “Bubble” is Over