May 18, 2012 / 9:03 PM / 7 years ago

Scramble for Facebook stock ends in "Face-flop"

NEW YORK (Reuters) - On Monday, 74-year-old Betty Tanguilig told her financial adviser to liquidate a $400,000 account and put all the proceeds into Facebook Inc IPO shares.

Her adviser, Alan Haft, agreed to sell only $46,000 of the $400,000 account, one of several the retiree has. But at about 6:00 a.m. EDT Friday, Haft heard from his brokerage firm, E*Trade Financial Corp, that Tanguilig did not get any IPO shares.

Tanguilig, a retired mother of eight, was furious. She has been on Facebook for many years and regularly logs in. “I had to have it,” she said.

But it turned out that missing out on the IPO shares, priced at $38, did not matter. The big first-day pop in Facebook’s share price that many analysts expected never happened. The highest the stock price hit on Friday, after opening at $42.05 per share, was $45.00. It closed at $38.23.

Advisers who spent many hours this week trying to secure shares for clients at the IPO price said it was all for naught.

“All that hype, all that work for Face-flop,” said one adviser from Wells Fargo Advisors, the brokerage arm of Wells Fargo & Co after the market close Friday.

Tanguilig still managed to get her stock close to her price. Haft secured $46,000 worth of Facebook stock for her at $38.10 - just 10 cents above the IPO price.

“If that stock had doubled in price, I never would have heard the end of it,” Haft said.


Haft, a financial adviser with California-based Kings Point Capital LLC who has $200 million in assets under management, has been fielding calls from clients desperate to buy Facebook shares for weeks. E*Trade alerted Haft’s clients as to how many Facebook shares they got at around 7 in the morning, East Coast time.

“I started getting calls and texts from clients at 4 a.m. my time,” Haft said.

One Bank of America Merrill Lynch broker said she had colleagues in at the crack of dawn finalizing client orders after Merrill extended its deadline for entering allocations to 7:30 a.m. Friday because of a backlog of documentation approval.

The firm initially told brokers on Thursday they had until 3 p.m. EDT to submit their allocations after finding out earlier that day how many shares they were allotted.

“The system was just so inundated,” said the broker, who declined to be identified because she is not permitted to speak to the media.

Selena Morris, a Merrill spokeswoman, did not return an e-mail and call requesting comment.


Jeff Gonzalez, a 31-year-old advertising director, put in an order for 24 shares around 11:30 a.m. EDT, right after the stock started trading, but canceled it when the shares did not rise.

“I had thought we would immediately see a 15 percent jump and was planning to get in and out,” he said, adding that he still may buy the stock again in a few weeks if the stock starts trading in the $20 range.

About 20 of Haft’s clients got Facebook shares pre-IPO, but by 2:00 p.m. EDT a handful of them had already sold out.

Scott Barkow, a financial adviser with Raymond James & Associates, the brokerage subsidiary of Raymond James Financial, spent some of Friday calling up clients who were not able to get shares pre-IPO to see if they still wanted shares. A couple of them were no longer interested, he said.

A Morgan Stanley Smith Barney broker said that clients who had hoped to go out to dinner Friday night and brag to friends about getting into the IPO are likely disappointed.

“Now this isn’t good cocktail conversation,” the adviser said, adding that if the stock had doubled, the Facebook IPOer “would have been picking up the tab.”

Robert Romano, president of communications and press relations at Sci-Fi United, which reviews science fiction productions online, bought 76 shares Friday morning for between $38 and $39 per share. He updated his Facebook status to read: “Operation Facebook pays off my mortgage is commencing! Off to the races.”

“I don’t have an expectation that will happen anytime soon, but it’s fun to be part of something historic,” he said.

Reporting By Jessica Toonkel; Additional reporting by Ashley Lau; Jennifer Hoyt Cummings; Editing by Gary Hill

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