Facebook IPO Proves Need for Overhaul: Lawmakers Darrell Issa raises concerns for small investors By Matt Cantor, Newser User Posted Jun 21, 2012 5:08 PM CDT 1 comment Comments In this Friday, May 18, 2012, file photo, the animated facade of the Nasdaq MarketSite welcomes the Facebook IPO. (AP Photo/Richard Drew, File) (Newser) – Lawmakers led by Rep. Darrell Issa have penned a letter to the SEC urging an overhaul of the IPO system, saying Facebook's shaky public offering underlines the raw deal handed to small investors, the Wall Street Journal reports. The Republican House Oversight chair wrote that investment banks "dictate pricing while only indirectly considering market supply-and-demand," potentially resulting in "outsized losses for ordinary investors." A Democratic senator, meanwhile, raised concern that during IPOs, "the retail investor comes in at a disadvantage." Fixing the process may require looking back to the 1933 legislation that created the SEC, lawmakers say. That law is "fraught with conflicts of interest and incentives to misprice shares," wrote Issa. Lawmakers want SEC chair Mary Schapiro to answer 34 questions by early July. The SEC is already investigating Facebook's IPO, examining glitches at Nasdaq and actions on the part of IPO underwriters led by Morgan Stanley.