“I was shocked. I’ve been around the tech IPO business for 20 years and I’ve never heard of anything like this.”That’s what Henry Blodget said on CNBC’s Fast Money Halftime Report , in response to reports that an analyst at Morgan Stanley – one of the IPOs underwriters -- cut Facebook forecasts during its roadshow.According to Reuters, "The bank's consumer Internet analyst, Scott Devitt, reduced his revenue forecasts for the company" in the days leading up to the IPO.

“The SEC has to look at this – it’s bizarre," says Blodget. "How can you have an estimate cut in the middle of a road show and not have that communicated widely?”

According to the report, allegedly, the information was only communicated to a few big institutional investors - it was not announced publicly. “That’s a gross violation of selective debt dissemination – where some investors have information that others do not,” says Blodget. Blodget, who was a famed analyst during the dotcom bubble but was later banned from the securities industry and is now the editor of The Business Insider , suggests all the underwriters may come under scrutiny – not just Morgan Stanley.

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