THE CEO of E-Commerce China Dangdang Inc. (NYSE: DANG), which went public last month in a $272 million IPO, has slammed Morgan Stanley for undervaluing his company and warned other Chinese companies against seeking a US stock listing.
Li Guoqing, who made the comments on Weibo, a Chinese microblog equivalent of Twitter run by Sina Corp, was reported by Bloomberg as saying: “I am openly here criticizing investment banks, criticizing Morgan Stanley. So what? Can’t Morgan Stanley be criticized?”
The comments were confirmed by the Beijing-based company, which said they were meant to be a warning to others seeking a stock listing in the U.S. and reflected the CEO’s personal opinions.
Morgan Stanley denies employees insulted CEO
However, a full transcript of the communications suggests that the CEO and supposed employees of Morgan Stanley got into a heated, expletive-strewn war of words, with the CEO mostly remaining calm while a tirade of insults were hurled at him.
Morgan Stanley said it had completed a preliminary investigation and believes that none of its employees were behind the postings responding to Li.
The comments were “offensive, highly unprofessional and do not reflect industry practices,” Morgan Stanley said in a statement to Bloomberg. “We condemn such behavior that can risk damaging a company’s brand and reputation.”
Dangdang’s stock has more than doubled from the IPO price of $16. Morgan Stanley and Credit Suisse Group AG managed Dangdang’s IPO of 17 million ADRs.
Dangdang is an e-commerce company in China that sells book titles and a range of other media products as well as selected general merchandise. It also operates the dangdang.com marketplace program, which allows third-party merchants to sell their general merchandise products alongside products sourced by the company.
US investment banks charge significantly higher fees for IPOs than banks in Europe, according to recent study by British academics. Mark Abrahamson, Tim Jenkinson and Howard Jones at Oxford University’s Saïd Business School said that Goldman Sachs and Morgan Stanley charged fees of 6.45% in the United States compared with 3.50% and 3.4% in Europe.
UPDATE: For full and outstanding coverage of this tempest, see TechRice.com’s report (contains profanity).