NEW YORK (Reuters) - Santa - or scrooge - has come early for advisers at Bank of America Merrill Lynch and Morgan Stanley Smith Barney.
Advisers at the two firms have started to find out how many Facebook IPO shares they are getting, just hours before the social media company is expected to price its initial public offering, according to advisers and clients at the firms.
Merrill advisers had until 3 p.m. EDT (1900 GMT) to allocate shares to clients, two advisers said. The brokerage has capped the number of Facebook shares for each client account at 2,000, while Morgan Stanley Smith Barney has set a 500-share cap, according to advisers at each of the firms. The advisers asked not to be identified because they are not permitted to talk to the press.
A Morgan Stanley adviser said she had heard that the firm had started allocating shares to advisers on the West Coast and was working its way East.
A spokeswoman for Morgan Stanley Smith Barney, a venture of Morgan Stanley, and Citigroup, declined to comment. A Merrill spokeswoman did not immediately return calls for comment.
Merrill began telling advisers how much they would get at around 11:00 EDT on Thursday, one adviser.
One Merrill Lynch adviser based on the East Coast said he was surprised to learn that the allocation for his office was about four times what he had expected.
“It’s a hell of a lot more than I would have anticipated,” he said, adding that he is scrambling to figure out how to divide his share up before the 3 p.m. deadline.
Merrill’s syndicate desk had sent out multiple e-mails over the last several weeks warning advisers not to expect to receive many shares for clients, said one adviser in the Western U.S.
“Very small allocations are expected on this offering, please manage client expectations,” at least one e-mail said, according to this adviser.
A third Merrill adviser, who is a veteran at the firm and has three clients eager to buy Facebook shares, quickly put out a call Thursday to one client who still needed to sign an online prospectus before the 3 p.m. deadline. The adviser said her office received “not nearly as much as we put in for,” but declined to elaborate.
The adviser reached the client, but she had just gotten off a plane at an airport. “She knew it was me,” but had spotty reception and it took 45 minutes for the client to get to an area where she could sign in online to her Merrill account to accept her prospectus, the adviser said.
“If we can’t ticket their shares, then there are other people that will want them,” the broker said.
At least one Morgan Stanley client learned how many Facebook shares he was getting on Thursday morning, and was disappointed. “They actually allocated far less than 500 shares to me,” said Scott Sweet, senior managing partner of research firm IPO Boutique. He declined to say how many shares he had received.
While Sweet’s broker has told him that he is trying to get him more un-ticketed shares - which are shares left over when some brokers that got allocations can’t locate clients to allocate to—he is disappointed.
“It’s not that I got shut out. Accounts will get shares,” he said. “But if people are thinking that 500 is a given, think again,” Sweet said.
Reporting by Jennifer Hoyt Cummings; Ashley Lau, Jessica Toonkel and Alistair Barr; Writing by Jessica Toonkel; Editing by Gerald E. McCormick, Steve Orlofsky and Carol Bishopric