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There is a lot of finger pointing going on about Facebook's initial public offering last Friday.

A lot of attention is being focused on the social media giant's Chief Financial Officer David Ebersman, who decided to increase the number of shares offered to investors by 25 percent days before the IPO. The Wall Street Journal writes, "That decision by the 41-year-old Facebook executive may have doomed any real chance the social-networking company had that its stock would jump on its first day of trading—a hallmark of successful IPOs."

As the Facebook IPO rapidly becomes a public-relations and legal nightmare for the company and its Wall Street underwriters, there are legitimate complaints to be made, but laying blame on the CFO is not one of them. (See: Facebook Fallout: Morgan Stanley May Face Legal Liability, Attorney Says)

Investors are really frustrated about three aspects of the IPO, which not long ago was being hyped as the deal of the century.

The first problem, a legitimate complaint, was that NASDAQ's computer systems failed on the morning of the deal. This led to many investors being unable to place or cancel stock orders or being left in the dark about whether their orders had been executed. This "glitch" may well have caused some investors to lose money.

The second complaint, which would deserve no sympathy if it weren't for other recent revelations, is that Facebook's stock did not "pop" as much as expected on the first day of trading. Investors have come to expect that such pops are as good as guaranteed on hot IPOs, and they therefore view them as a way to pick up some free money. But of course nothing is guaranteed, and every dollar short-term investors make from a big "pop" is a dollar the company has given away for nothing, so underwriters do a better job for their clients when they price their stocks just under the prevailing market value. In Facebook's case, this initial market value was about 10% above the IPO price, or $42, which is plenty of "free money" for investors.

But then there are the recent revelations, which is that big institutional investors had much better information about the current condition of Facebook's business than small investors did. This revelation may well have played into the modest stock "pop" on the first day of trading, and it may also have caused some would-be long-term institutional investors to jettison Facebook's shares, thus exacerbating the price decline.

The information that big institutions were given was estimates for Facebook's future performance, which were developed by the underwriters' research analysts.

These estimates are verbally distributed in most IPOs, and the institutions use these estimates to help decide on a fair price to pay for the stock. In Facebook's case, however, the underwriters' analysts cut their estimates midway through the roadshow, which is a highly unusual and negative event. They did this because Facebook told them that its business outlook had deteriorated--information that was not given to small investors.

As a result of this estimate cut, combined with an increase in the size and price of the deal and the number of shares sold by insiders, some institutional investors "got the willies" about the Facebook deal. Individual investors, meanwhile, were unaware that anything had changed.

In the wake of these revelations, Facebook's lead underwriter, Morgan Stanley, said that it had followed the rules. And it may have. If Morgan Stanley followed the rules, however, the rules themselves are grossly unfair. Because they allowed big institutional investors to learn just before the IPO that Facebook's business had deteriorated, while smaller investors were left thinking everything was just fine.

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