Not wrong. Facebook and the investors that sold stock in the IPO got $38*the number of shares. Whatever happens after the IPO is essentially irrelevant to them, except their remaining shares have gone down in market price. That probably doesn't hurt much if you realize that a day earlier there was no market price, and you got a great deal on the shares you did sell. Morgan Stanley is probably also not being harmed in this transaction (see http://en.wikipedia.org/wiki/Greenshoe ). They do have reason to support the IPO price level. Otherwise, it will be much harder for them to find investors for the next Internet IPO, which means lower prices, which means lower underwriter fees.

The people on the wrong end of the deal are those that bought Facebook shares pre-IPO or in the hours after the IPO. The people on the right end are all early Facebook investors selling shares and the underwriters.