Facebook and banks including Morgan Stanley are being sued by shareholders who claim the defendants hid Facebook's weakened growth forecasts when shares went on sale for the first time last Friday.
U.S. regulators say Facebook's initial public offering should be reviewed, putting a spotlight on Morgan Stanley.
The financial services firm denied the accusation: "Morgan Stanley followed the same procedures for the Facebook offering that it follows for all IPOs. These procedures are in compliance with all applicable regulations. "
"Revised views [of growth forecasts] were taken into account in the pricing of the IPO," the company said in a statement.
Facebook and Morgan Stanley are being sued by shareholders who claim weakened growth forecasts were hidden ahead of shares being sold.
If Facebook can get around privacy issues to use advertising better and capitalise on markets like China and Russia, prices should recover.
After all the hype about the most expensive flotation of a company ever, Facebook shares are well down on what they were when launched.