In snaring the most coveted investment-banking assignment of the year, Morgan Stanley's MS +2.66% Michael Grimes insisted to a senior Facebook Inc.FB +6.09% executive that he be the "single driver" of the company's initial public offering, adding that if the deal soured, it would be his "throat to choke."
Mr. Grimes's audacious, successful pitch to minimize input from other underwriters put Morgan Stanley in a position to exert unusual control over the IPO and to scoop up a bigger share of its fees. But it also turned the veteran Silicon Valley investment banker and his firm into targets for criticism when Facebook's IPO swiftly turned bad for many investors.
In the wake of the botched offering—Facebook has shed $22 billion in market value since the May 18 deal—much of the focus has been on the chaotic first day of trading, which was marred by technical problems on the Nasdaq Stock Market. But interviews with Wall Street bankers, brokers, investors and Silicon Valley executives reveal that Mr. Grimes, his firm and Facebook made several decisions in the weeks leading up to the offering that contributed to the rocky ride.